This talk was given to celebrate the 9th anniversary of Insurance Solutions Limited by Managing Director, Peter Taylor at a regular monthly "Gathering" on 7th February 2002.

Last year generated a lot of "hype" or "spin" - this in turn created "perceptions".

A number of seminars last year, especially with an international focus, had the theme "Perceptions and Reality".

A recent e-mail from our man in New York, which tragically has been in the news for other reasons, gave me the idea to highlight a few misconceptions generated last year.

More of New York later, but it has something to do with manipulating the alphabet.

Talking of the alphabet, let us start with:

Afghanistan

The War is said to have been won, although the protagonist has yet to be caught. Panorama recently reported that this newfound peace has allowed the Poppy farmers to start up again - creating the basis of a different war, that will cost more lives. A harsh "Reality"!

Argentina

Once seen as the brave adopter of pegging the US$, and a shining example to the rest of Latin America, has now reverted to the bad old days and had 5 Presidents in as many weeks!

It has lost the plot with the international financial community.

Brazil

The country of the Future where the future never comes - yet it is the world's second largest manufacturer of mobile 'phones and has the third largest brewing business in the world.

Not just an exporter of coffee, Brazil is also a major player in the international aviation market.

Premium, by the way, is paid direct to insurers so there are no arguments, as in London, over credit periods!

CII

Great emphasis has been placed on all its changes for the better with its new e-learning capability but it lacks international support to back it up!
Note also CPD verified on only 2% of membership in any one year.

Cuba

Now home to the Al Quaeda. The USA was high profile in the WTO talks in Doha but US Corporate capital still prevents its Syndicates at Lloyd's from writing Cuban business. Please note, Mr Markel!

E- world

Often "pushed" as the answer to the insurance industry's distribution problems - it still requires the old fashioned marketing to get it noticed!
Note: ISL's involvement with the first "virtual" conference on insurance and financial services, which has now had over 20,000 visitors.

GISC

Ideally, the General Insurance Standards Council would like to communicate with its members by e-mail but not only are many lacking e-mail facilities, they prefer hard copy - the "dinosaurs" are alive and well.

Independent

Here was a classic example of "Perception" which proved that you can fool most of the people most of the time until the dramatic "Reality" was exposed in June last year. Beware the company with too high a profile!

International

The visit last month of a delegation from the State Development and Planning Commission of China revealed the lack of co-ordination in London to cater for foreign visitors, although we claim to be an International Financial Centre -
Note: the value of the Lloyd's Brokers who, for some unknown reason, were left out of Lloyd's Market Study Groups after R&R!
London's problem is that there are still too many vested interests, which conveniently brings us to LLOYD'S in our Alphabet.

LLOYD'S

The "trumpeted" announcements that 2002 will see the largest capacity ever in Lloyd's at £12 billion received much Press coverage. However:

i) This fantastic new figure does not take into account the fact that it is actually about half of the Society's capital of 10 years ago - in Real terms!

ii) No account is taken of whether the reinsurance (up to 80%) will actually respond to the WTC claims etc

iii) The drop in the number of Natural Names (the core of Lloyd's) suggests that not all were convinced about the sustainability of increased rates.

iv) An "Underwriting Centre of Excellence" has been the message or "Perception" that has been put about- the "Reality" has been lousy results. However, LLOYD's is still winning the "Perception" game - just!

( Here, I would suggest Hype is great, as long as you don't actually believe your own!)

LMP 2001+?

Delays by members of the International Underwriting Association were attributed to ownership by overseas interests but, surely, Lloyd's is just as foreign-owned.
Why should it take so long - again vested interests?

Nigeria

Trying to return to the International fold. Massive country, massive resources and massive scams - definitely suffering from "Perception" but here the "Reality" check is constantly tarnished, in spite of some genuinely honest folk trying to put it right.

How many of us know that there were more people killed in their religious riots, which followed the WTC, than were actually killed in the WTC?

Nigeria has lost the "Perception" battle, so far.

Interestingly, prior to my first trip to Nigeria, I had to take a serious dose of anti-malaria tablets only to find one mosquito in Lagos. A month later, I went to Florida (the Mosquito State by their own admission), but anti-malaria tablets were not recommended. However, It would only take one visitor from Nigeria!

PRESS

Often maligned but are dependent on input from Market practitioners!
They are also the "Gatekeepers" to the stability and sanity of our Market.

Singapore

"Perception" - squeaky clean and well organised. Yet it had the largest Operational Risk loss ever seen in the Banking world.

The irony here is that this might have been avoided - two years prior to the Barings debacle, I had taken a demo disk for Operational Risk software to the MAS, but I suspect the fellow was more concerned about the risk of corrupting his PC!

On the insurance front, the Singapore Government is still delaying the final dividend from its two reinsurance companies (10 yrs on) because its Tax Authorities feel there is tax due from these insolvencies!

Now, talking of "Perception", Singapore punches well above its weight!

USA

Our American cousins are very good at telling us how to run our business (even Enron did not stop Mr Markel). The gap between " Perception " and "Reality" was brought home to me the other night whilst watching the documentary on the events leading up to the horror of Challenger in 1985.

In one of the pre-launch scenarios, NASA was having trouble removing a bolt on the cockpit hatch - no battery-powered drill, after several attempts, was found to work - so they used a hacksaw!

Not much has changed - after visiting Kennedy Space Centre last August, with its impressive range of technology, I was confronted with the scene of 5 men painting lines on the road.

A very large pot of cement paint was being towed along on a wooden trolley into which was dipped a roller on a stick. There was no sign even of a stencil for some of the complicated road markings. (arrows )

Venezuela

" Perceptions and Reality " was the title of a seminar I attended recently on Venezuela. In the '60s, the country was said to have only 15 years supply of oil left - to day its national oil company PDVSA is the second largest producer in the world after Aramco in Saudi Arabia.

PDVSA has more "outlets" in the USA than McDonalds and is also a responsible partner in OPEC - more of the " Reality" can be learned from Dick Elliott, who was in Venezuela last month for AXCO.

WTC

Change happens, we are told, only if given the impetus by a disaster. September 11 was certainly a disaster, but it changed at least two perceptions -

The Irish are no longer the world's experts at demolition
and
the Middle East can no longer be regarded as a problem that will go away, if we ignore it enough.

Xenophobia

Considering that London is hailed as an International Centre, the London Market does not spend enough time getting to know the cultures of our foreign partners. The City's reputation is obviously based on something.

Which brings me back, if you can still remember the beginning of my spiel, to the Alphabet and the message from " Our man in New York ", who sent me that e-mail.

It was about how to deliver more than 100% or, should we say, outdo "Reality".

If A = 1 and Z= 26 then ATTITUDE = 100% but
to achieve more than 100% you need BULLSHIT =103%!

What happened to Z?

Well, I am hoping that Zimbabwe and African issues will be covered at a future "Gathering" by Mike Bennett of Hypercube, who hails originally from Zimbabwe.

Peter Taylor
Insurance Solutions Limited
ISL " Gathering" - Thursday 7 February 2002
Celebrating 9th Anniversary of Insurance Solutions Limited

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