Risk managers were told to put more pressure on insurance service providers to improve contract certainty and transparency by John Tiner, chief executive of the Financial Services Authority (FSA), at the recent Association of Insurance Risk Managers (AIRMIC) annual conference.

Addressing delegates in the opening keynote speech of the event, Tiner said there were still improvements to be made in the areas of contract certainty, the timeliness of policy issuance, disclosure of data and commissions and the general efficiency of the insurance buying process.

But he was surprised that risk managers were not “punching their weight” in the drive for improvement considering the choice and power they hold within the insurance market.

“Is it apathy from risk managers, lack of interest from their boards or a mixture of both? Is it just an acceptance of the old status quo?” Tiner asked.

According to Tiner, 20 percent of insurance contracts still do not meet acceptable standards of certainty and transparency and it up to risk managers, brokers and insurers to “eek out efficiencies in the buying process” together.

However, Tiner met resistance from some members of the audience, who complained that he had over-estimated the position of bargaining power risk managers really had with their brokers.

Tiner said the FSA would prefer to see a market-led solution to the current situation, but it may be forced to consider introducing mandatory disclosure laws if the industry cannot find its own answers.

“Treatment to a symptom is a poor substitute to treatment of the root cause,” he said.

www.airmic.com

•Date: 23rd June 2006• Region: UK •Type: Article •Topic: Op.risk
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