BOW WAVE 183

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news and views on trade, insurance and risk

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Wavy Line	sam@wavyline.com
(c)2003 WavyLine.com	Issue No 183 25 May 03
Published free of charge to Readers
Editor: Sam Ignarski
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In this issue:

1. Welcome
2. Talk Talk better than Sell Sell
3. Regulatory Compliance Seminar
4. Container Economics
5. Maritime Derivations
6. And Finally...

1. Welcome

From The Kindness of Strangers, the autobiography of BBC Foreign Correspondent Kate Adie:

We roamed round northern Sardinia, among the stone-covered hills and up into the grim and unfriendly villages in the mountains. Bearded shepherds waved rifles angrily at us, and the shutters snapped shut as we came in to the village square. The atmosphere of menace was palpable, for here came the foreigners interfering with the good old-fashioned system of raising money in a poor region; all around us were two-storey buildings with the walls of the top storey half-built waiting for the next ransom to be stuffed under the door. Even so, what freedom we had. In 1980 the only phones which worked -sometimes-were in the main hotels. We'd book a call early morning, talk to the office, and know that until we came back with new information and pictures, there'd be no communication from Television Centre. It meant we chased the tale according to what we found on the ground, with no interference from editors no minute-by-minute calls on the mobile phone, no directions as to 'how we see it in London'. Reports reflected the priorities as seen in a foreign country, rather than a consensus view from a newsdesk in Shepherd's Bush.

(pp 117-118, Headline Publishing, London 2002, ISBN 0 7553 1073 X)

New Readers this week include:

Mike Girouard, Marketing and Communications Man at brokers Tysers Paul Manning of Noble Denton Singapore
Rajiv Tetarbe of Chellaram Shipping (HK) Ltd.
John Chamberlain, Senior VP of Signal Administration Inc John Howes of the Benfield Group
Underwriter Ian Pettican of Allianz Marine's Transport & Liability Division Frank Stevens of Antwerp Law
Gerald Fisher and Kenneth Mattfeld of Arter & Hadden, LLP (Maritime Lawyers) Robert Lynn

Readers Write:

From Paul Gunton, the editor of Fairplay

The Top 20 from our recent on-line poll is now available on the website. We only had room for the top 12 in the 120th Anniversary supplement, but have posted all 20 on the web (this is explained in the supplement). You can either log onto our website and click on the link below the front cover image, or go straight to

http://www.lrfairplay.com/archway/magazine/120issue/default.htm

Many thanks to all those who contributed ideas, biographies and photos to this project.

A longer edition than usual, but something of interest for everyone, we hope.

Enjoy.

2. Talk Talk better than Sell Sell

Your editor's latest Quarterpoints column in Lloyd's List ponders the demise of inreon and the future for IT in commercial insurance.

Some thoughts on the passing of inreon and the road ahead 21-05-2003

IN A dark wine bar in Lime Street, I had a glass the other day with some veterans of the IT struggles of the London Market. The conversation turned to the demise of inreon, the online reinsurance market.

This venture is said to have used up £32m ($53m) in its progress between its hopeful start during the internet bubble to its demise this month.

The thing was, this market was transacting business and it had backers with serious money behind it. Yet even sponsorship by Swiss Re and Munich Re was not enough to guarantee it success. In the end the desire for electronic trading was not enough awakened, and so it was suggested, in London, the brokers and underwriters dictated the pace and the modest take-up.

So the confusion as to what to do remains high in the market. Everyone can recognise that the costs of transacting insurance business are too high for modern conditions yet still the low costs and fast pace of electronic systems are elusive. Management and Acquisition costs of insurance often are in excess of 30% of premium costs, response times are sluggish, claims are put in line for payment and settled weeks or months later.

So if the success of the consumer insurers cannot be replicated by the London market and commercial lines, where do IT or electronic methods fit in? Where is it possible today to push at an open door?

There are certainly areas where the market is at ease with IT solutions. It is possible to introduce into customer relationships good IT systems which allow payment, claims administration, document deposit and other things which might be deemed back office. The market's use of the internet grows with each passing week and there is a steady rise in sophistication and the flow of information so necessary for the formation of underwriting judgment.

There is without doubt a London market network which radiates out into the international insurance markets, mainly via the distribution of the broking houses. Where there is more work to do is in the fostering of a market community which transcends geography. While the flow of insurance related, topical, specialised information is without peer in London, the community which the market serves around the world is often less well informed and less up to date with developments. The need for a greater sense of conversation between the buyers, their brokers and the market is bridged by small e-zines, unofficial newsletters and highly specialised publications like the Insurance Insider, while the major stories are presented to the mainstream insurance press.

I have heard the market's repugnance towards electronic trading is understandable in terms of human need and anthropology. Under this explanation, it is necessary for transactions involving faith or trust to be conducted by parties in close proximity with each other and always able to hear the inflections of voice and to see the eyes of the interlocutor. Insurance, being a product which has a high promissory content, has a very heavy need to hear and see the other side. And of course selling, known in our industry as broking, is a very human process which may need a substantial investment of time, ingenuity, design, argument and a known course of dealings before the sale is closed and the risk is bound. This is a very hard collection of things to duplicate using computer software.

So, perhaps the future looks more like this. The interpersonal relationship keeps its primacy into the future. But, perhaps the parties in negotiation have better and better fulfilment systems, behind the parapet, not really very visible, but able to document, bill, settle and administer very cheaply and rapidly. This superior back office is an aid to administration rather than a sales tool.

The market itself needs greater use of the technology to raise the conversational level of the industry so that what at present still quite often moves from hand to hand is carried around the market more generally. For in hard truth, the passing of inreon demonstrates again what we have learned at great expense in many branches of the financial services industry. The internet is really a very so-so tool in the all-important area of selling and buying. At best it thrives in marginal areas and for products and services where consumers are able to go direct to suppliers in exchange for low prices.

On the other hand, the internet is a wonderful new tool for the propagation of argument, information, conversation and affinity. It is still largely unexploited by the larger battalions in our industry partly because it is still an unfamiliar medium but also because it demands a tone of voice which is rather personal and somewhat removed from the formal style preferred by PROs and marketing directors. It destroys many of the disadvantages of distance and helps to draw the like minded together. Did inreon ever foster a conversation amongst its market? Publish an e-zine? Trawl ideas? Discuss scenarios?

3. Regulatory Compliance Seminar

On Thursday, June 5, Moore Stephens will be hosting a briefing session at the London Underwriting Centre on the financial requirements of the new regulatory regime for the insurance industry. Entitled, "Ringing the Changes - Innovative Solution to Crippling Compliance", the briefing will provide a practical guide to what the insurance industry needs to do NOW, in the light of the FSA's recent pronouncements, to conform to the new regime.

Attendance is free and places will be allocated on a first-come, first-served basis. To reserve a place at the briefing, contact Tim Beauchamp

Tel: +44 (0)20 7651 1032,
email:stephens.com

4. Container Economics

Our item by Charles de Trenck last week prompted Mike Power to point us to his Second Thoughts, a persuasive piece on the whys and wherefores of liner unprofitability. The piece appeared in the April edition of Lloyd's Shipping Economist. By courtesy and arrangement of Stephen Mathews, the Editor of the publication, Bow Wave Readers can access this piece via the website's free seven day trial link.

Go to:

http:www.shipecon.com

5. Maritime Derivations

Our item last week on the derivations of English idiom prompted this contribution from Reader Gary Hartland:

Your readership may wish to know

In the 17th & 18c it was common for 'ladies of the night' to be carried on British Naval vessels. The ladies lived on the 'gun deck' which doubled as a mess area for ratings. Pepys writes that Officers would avoid the gun deck whenever possible , even on their rounds. Sometimes of course the ladies were found 'with child' . The practice was for the offspring, if it was male and survived, to stay on board and live on the gun deck. These boys would have been interesting characters to say the least.

In fact they were ..........son of a gun...........
The cat o nine tails was kept within a leather bag which was inherent to the stitching of the lash itself. (There are some examples in the maritime museum) You had to turn it inside out to expose the 'nine tails'. When finished with the tails were inverted back into the bag section itself
.
don't let the cat out of the bag................
When a sailing vessel lost someone onboard and wished to communicate this ashore she would set the fore and aft rig by raising the 'tack' off the sail and lowering the 'peak'. (Opposite to normal.) This would give the vessel 'scandal lines'. It was also a method of slowing down to trawl.
When in such a rig all of the decks normally hidden by the sails would be shown. So either someone's dead or the dirty washing is there to be seen ,

either way its a bit of a .......scandal.

Fanny Adams was the victim of a famous murder in London. She was cut up in such a terrible way that bits of her kept turning up for years.When bits of clothing , especially buttons, started turning up in sailors tinned meat in the 19c it was

......Sweet Fanny Adams.......

Some contend that the meat was also said to contain no meat at all , hence sweet FA. This derivation cannot be proven...
Honest

6. And Finally...

David Cheslin writes:

Exercise of the brain is as important as exercise of the muscles.

As we grow older, it's important that we keep mentally alert. The saying:"If you don't use it, you will lose it" also applies to the brain, so... Below is a very private way to monitor your loss or retention of intelligence. So take the following test presented here and determine if you are losing it!

OK, relax, clear your mind and ...... begin.

1. What do you put in a toaster?

The answer is bread. If you said "toast", then give up now and go do something else. Try not to hurt yourself. If you said, "bread", go to question two.

2. Say "silk" five times. Now spell "silk". What do cows drink?

Answer: Cows drink water. If you said "milk", please do not attempt the next question. Your brain is obviously overstressed and may even overheat. It may be that you need to content yourself with reading something more appropriate such as "Children's World". If you said, "water" then proceed to question three.

3. If a red house is made from red bricks and a blue house is made from blue bricks and a pink house is made from pink bricks and a black house is made from black bricks, what is a greenhouse made from?

Answer: Greenhouses are made from glass. If you said "green bricks", what the heck are you still doing here reading these questions? If you said "glass", then go on to question four.

4. Twenty years ago, a plane was flying at 20,000 feet over Germany. If you will recall, Germany at the time was politically divided into West Germany and East Germany. Anyway, during the flight, TWO of the engines fail. The pilot, realizing that the last remaining engine is also failing, decides on a crash landing procedure. Unfortunately, the engine fails before he has time and the plane crashes smack in the middle of "no man's land" between East Germany and West Germany. Where would you bury the survivors - East Germany or West Germany or in "no man's land"?

Answer: You don't, of course, bury survivors. If you said ANYTHING else, you are a real dunce and you must NEVER try to rescue anyone from a plane crash. Your efforts would not be appreciated. If you said, "Don't bury the survivors" then proceed to the question 5.

5. If the hour hand on a clock moves 1/60th of a degree every minute then how many degrees will the hour hand move in one hour?

Answer: One degree. If you said "360 degrees" or anything other than "one degree", you are to be congratulated on getting this far, but you are obviously out of your league. Turn your pencil in and exit the room. Everyone else proceed to the final question.

6. Without using a calculator: You are driving a bus from London to Milford Haven in Wales. In London, 17 people get on the bus. In Reading, six people get off the bus and nine people get on. In Swindon, two people get off and four get on. In Cardiff, 11 people get off and 16 people get on. In Swansea three people get off and five people get on. In Carmathen, six people get off and three get on. You then arrive at Milford Haven. What was the name of the bus driver?

Answer: Oh, for heaven sake! It was YOU, you dummy. Read the first line!!!

PS From IT guru Roger Foord:

Some financial quotes I have recently come across:

I don’t have a savings account because I don’t know my mother’s maiden name

How to tell a bad bank: When you make a deposit the tellers high-five each other.

Money isn’t everything, but it sure keeps you in touch with the children.

A stock broker is a man who is smart enough to tell you what stocks to buy, and too smart to buy them himself.

BOW WAVE is published each week to around 7550 Readers in the transport,insurance,shipping and finance industries.

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