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The Actuary The magazine of the Institute & Faculty of Actuaries

General Insurance Board news

Read all about it!

It’s not often that the chairman of the General Insurance Board hits the front page of the newspapers, but in the week before Christmas it was difficult to avoid seeing Julian Lowe and his working party’s report on the cost of compensation culture. Not content with making his mark in the Daily Telegraph, The Times, Financial Times, The Economist, etc, Julian then took to the airwaves with Radio 4’s Today programme, BBC1’s business breakfast programme and news, and other broadcasts too numerous to mention. He was last heard of being approached by the New York Times for an interview. If anyone would like a copy of the report, please contact Peter Stirling at Staple Inn, email peters@actuaries.org.uk.

General Insurance Professional Standards and Guidance Committee

This month we focus on the work of the General Insurance Professional Standards and Guidance Committee, with a report from its chairman, John Ryan. The committee’s membership is drawn from all aspects of general insurance business including brokers, syndicates, consultancies, and insurance companies. For further information on the work of the committee and its recent work on guidance notes and advisory notes, please contact Peter Stirling (details above).

John Ryan reports:
The committee is responsible to the General Insurance Board (GIB) for preparing guidance notes (GNs) and dealing with maintenance of professional standards, as well as generally protecting and enhancing the profession’s reputation for quality services. This is a very important role at a time when professions are under attack and financial markets are in turmoil. It is also responsible for helping members in their professional issues and liaising with the rest of the profession for consistency as well as to ensure best practice. The committee is responsible for recommending policy to GIB, which are responsible for all decisions. Nevertheless the committee does most of the detailed work and for practical purposes gets the job done.

In the past 12 months, the committee has revised three guidance notes and produced a data adequacy note. The latter followed from the discussion of a peer review process with Lloyd’s. It reflected the Lloyd’s preferred approach of not introducing peer review but strengthening GNs, especially the data note to formalise the need to verify key assumptions. Although the profession is still keen to introduce some form of peer review process, all the practice boards have found there are considerable practical difficulties. Indeed, general insurance was ahead of the game in introducing it, but changes at Lloyd’s meant that Lloyd’s preferred the other route. However, the committee has produced a draft GN on the role of peer review which is available to interested parties. In fact, this was used as an input into the Irish process.

For the current year, the committee is looking at what can be done to monitor and improve professional standards in the general insurance field. The committee would welcome any comments that any member might like to make on the topic. After all, the high reputation of the profession benefits all of us and any shortfall hurts all of us. The committee is also looking at introducing a GN on the transfer of general insurance liabilities and some form of advice on the use of non-actuarial experts. This will be based on the work of the Giro Working Party.

Throughout its work there is a perennial conflict between imposing high standards, increasing the obligations of the actuary to clients and interested consumers, and creating the possibility of significant exposure to professional indemnity claims in today’s litigious society. In this and other areas it is important that the committee covers all strands of general insurance thought. There are potential conflicts between the consultants and employed actuaries on certain practices. It is important that the committee reflects that. It is perhaps appropriate that the chairman’s day job is one of a broker.