View more on these topics

Stop treating PI as a social fund

How, in Broker Talkback, could you possibly have 63 per cent think that “the FSA&#39s plan to create a captive insurer of a PI cover can resolve the current PI crisis”?

Look at the answers – “Let&#39s just hope this works,” “Yes, it has got to be worth a try,” -and so it goes on.

There is only one answer to the PI problem – stop treating insurance as a social fund.

Nibbling around the edges of a problem has never ever solved it.

The FSA and its forbears are culpable because they have sought to treat indemnity insurance as a social fund. It is an international malaise, which has got to stop.

The only time that indemnity insurance should pay out is to indemnify somebody against:

•Provable negligence.

•Physical financial loss.

Unless and until the FSA leads the way (and I understood that was what it was put in place for) in restoring the balance of insurance funds (which have a commercial basis) and social funds (which have a Government basis), this particular problem will not be resolved either for the financial services industry or the wider implications on employers liability, public liability and directors&#39 liability insurances.

Let us not “hope” or feel it is “worth a try”. Let us assess the problem mathematically and then deal with it properly. No more experiments please.

The current regulatory experiment, as your columns so amply illustrate from the letters of intelligent individuals who live with the problem everyday shows, has failed.

It is not for accountants, Governments, bankers or journalists to solve this problem – it is for insurance people. They should understand the problem.

Even a captive insurance has to be commercially viable. Tell that to John Tiner and his cohorts who have just extended (by what right, I know not)the rights of individuals to complain about their endowment policies at the bottom of a bear market. That should bring more PI insurers back into the marketplace.

Terence O&#39Halloran Newland,



Norwich Union – Prosper (Growth) Bond Issue 5

Friday, 28 February 2003 Type: Guaranteed equity bond Aim: Growth linked to the performance of the FTSE 100 index Minimum-maximum investment: £3,500-no maximum Term: Five years Guarantee: Capital returned in full regardless of the performance of the index Return: Up to 57.5% net growth at end of term Closing date: March 28, 2003 Special offer: […]

Base instincts

The No S*!@ Sherlock award for earth-shattering news this week has to go to Yorkshire Bank. What journalist could resist a press release bearing the headline, Yorkshire offset still tracks Bank of England base rate?The Diary applauds Yorkshire&#39s decision to pass on all 0.25 per cent of the recent rate cut but the society&#39s headline […]

Take care of customers

Few challenges facing financial institutions in the coming year are as significant -or as neglected – as improving meaningful interaction with customers.When the going gets tough, let us all batten down the hatches and hide – an understandable reaction from the financial services industry but short-sighted. Lead-generation initiatives are still rife but, as Gartner pointed […]

Means to a trend

In the last couple of articles, I have looked at trends in male and female life expectancy over the last few decades and highlighted the implications of the significant increases we have seen.I considered the impact these trends could have on the demand from clients for conventional annuities or flexible retirement income options such as […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm