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Archived stories from 2011

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Insurers hit out at banking proposals

?The insurance industry is not the same as banking,? says market leader. ?We earn much more than them.?

Proposals to curb the excesses of the banks, which resulted in many countries having to bail out their lenders, should not be applied to insurers, senior figures in the industry argue. ?We do not want insurers to be caught up in the political backlash against the banks,? Jean-Michel Dongle, Directeur General of the Directorate of Insurance Matters (DIM) told RISKbitz. ?Imposing the same punitive rules on insurers as have been forced on the banks would have a very serious impact on our industry. A culture of excessive risk taking is at the heart of our business.?

Dongle said: ?Our attitude towards taking risk has ensured that some of the world?s biggest disasters have been insured: Piper Alpha, Exxon Valdez, Deepwater Horizon, asbestos. Without insurance to oil the wheels of the global economy, naked capitalism, which pursues profit ahead of over every other consideration, including safety, would not be able to flourish. If it weren?t for DIM insurers, investment banks wouldn?t have found buyers for many of their riskiest securitised products.?

Peregrine Psmith, Chairman of the London Institute of Market Practitioners (LIMP), denounced proposals to make banks reveal the wages of their highest earners. ?They had better not do that to us. Our wage bill is our biggest expense ? after our underwriting losses of course.?

Psmith hit out at suggestions that bankers? bonuses should be linked to the profits they make for their firm. ?If that were to happen in reinsurance then hardly any underwriter would make a bonus this year. In fact, some of them would never make a bonus. Syndicates need to pay large salaries to retain their talent ? it would hurt their premium income if underwriters were to take their loss-making business to a rival.?

After more than a decade spent trying to convince a sceptical world that they are just like investment bankers, the ire directed at bankers has prompted insurance and reinsurance brokers to rethink their role. ?Bankers are a completely different breed to us. They have doctorates in astrophysics, work 14 hour days, go to the gym and are teetotal. We are far more professional? in finding ways to cover up large bills from lap-dancing clubs in our expenses claims,? said Peter Cantilever-Bridge, Chief Executive of London Insurance Brokers Expertise Liaison (LIBEL).

It would completely undermine the broking profession if it were judged on the profitability of the business it brings insurers, said Cantilever-Bridge. ?The measure of success in broking is to make sure disasters waiting to happen are transferred from their clients? balance sheets to those of insurers and reinsurers.?

?My old friend Jonny Pocklethwaite is probably the most successful broker in the business,? added Cantilever-Bridge. ?His marine account has earned him enough for a house in Chelsea, a country estate in Sussex, a ski lodge in Gstaad and a house in Lyford Cay, Bahamas. But never once in over 20 years has he made any money for those who wrote his risks. In fact, I think he?s quite proud of that fact. His record is probably the most consistent in the business.?

Pocklethwaite, who was interviewed during a ?renewal meeting? at Jiggy?z nightclub off Leicester Square, said: ?I need all the money I earn. My ex-wife is chasing me for alimony, my current wife wants Nicky Haslam to redesign our third house and my mistress is demanding new breasts. People don?t understand the pressure I?m under.?


Other news from Apr 2011
 
Travelating the Wave of Insurability
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