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John Tiner, head of the United Kingdom's Financial Services Authority, fired another rocket at the risk management community last week when he expressed his disappointment that it was still failing to flex its buying muscles with brokers and insurers over commission disclosure.
Mr. Tiner first broached the issue during his keynote speech at the Association of Insurance and Risk Managers conference in Bournemouth, England in June.
He raised a few hackles among the delegates when he suggested that they had failed to play their part in the drive towards a more transparent insurance industry that was initially sparked by New York Attorney General Eliot Spitzer.
Mr. Tiner said that he was not keen to follow Mr. Spitzer's aggressive example and force the issue by mandating commission disclosure. But he warned risk managers that the FSA would act if the industry failed to deliver.
Three months on, Mr. Tiner used the platform of the Insurance Institute of London lunchtime lecture in the Old Library at Lloyd's of London to repeat his exasperation at the lack of progress.
He said that he understood the diametrically-opposed positions of the insurers and brokers on this thorny issue in the London subscription insurance market would be difficult to resolve, but he again expressed his disappointment about the lack of pressure applied by the ultimate drivers of this marketthe buying community.
"I am not a little surprised by the lack of customer-power that is exercised in this market, especially among the larger companies," said Mr. Tiner.
"This market is about sophisticated buyers looking to transfer significant risks in a market that they know and understand. And so once again, I would urge those corporate buyers in the market to recognize their position of influence, punch their weight and in so doing, drive through greater efficiencies and transparency in the market," he continued.
Mr. Tiner has a very good point that he has, once again, made in his refreshingly blunt manner.
Major insurance buyers with huge budgets should demand the best from their brokers and insurers, and ride roughshod over the usual mealy-mouthed excuses that are regularly trotted out to avoid the root and branch change that is so obviously needed. However, the unfortunate reality is that it is not that simple.
The London subscription market is an ancient and strange animal that, because of its wholesale and international nature, is somewhat divorced from the normal workings of demand, supply and price.
For this reason, the brokers and insurers that populate this market can, do and will continue to resist the forces of change as they pursue their own particular interests, even if the buyers start to flex their muscles.
If one of the major betting shops ran a book on political issues within the insurance market, the odds would be pretty poor on the chances of the FSA not having to impose commission disclosure.
And, risk managers who use the London market should not expect any sympathy from the FSA when they howl about another raft of complex and expensive regulations.