BOW WAVE 399

Bow Wave Issue 399--Regulatory Edition

news and views on trade, insurance and risk

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Wavy Line	sam@wavyline.com
(c)2007 WavyLine.com	Issue No 399 16 Jul 07
Published free of charge to Readers
Editor: Sam Ignarski
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In this issue:

1. Welcome
2. Quarterpoints
3. New Head of FSA
4. ISU Welcomes SCOPIC Renewal
5. CLECAT Freight Forwarders’ Conference
6. And Finally...

1. Welcome

Poem of the Week

A Primer of the Daily Round

A peels an apple, while B kneels to God,
C telephones to D, who has a hand
On E's knee, F coughs, G turns up the sod
For H's grave, I do not understand
But J is bringing one clay pigeon down
While K brings down a nightstick on L's head,
And M takes mustard, N drives into town,
O goes to bed with P, and Q drops dead,
R lies to S, but happens to be heard
By T, who tells U not to fire V
For having to give W the word
That X is now deceiving Y with Z,
Who happens just now to remember A
Peeling an apple somewhere far away.

Howard Nemerov

New Readers this week include:-

Herman Cruz of Marsh
Barry Porter OF McLarens Young International In HK

Readers Write

From Richard Henshaw

Calling all ex Port Line Seagoing and Office Staff
A Vintage Port Reunion will be held in Christchurch, New Zealand on 21-23 November 2008. To help with planning, we would like to hear from any Port Liner who would like to catch up with old friends. For further information please email Dick Henshaw at:-

vpreunion2008@paradise.net.nz

From Jerry Whitmarsh

I was interested in the item on waves (Bow Wave Issue 39). Although the site is a bit clunky, (especially in firefox) the data is impressive. Here is another site which provides a similarly impressive dataset, especially if you fancy a swim

http://www.oceanweather.com/data/

AvoArchive.Com

The archive of our sister publication the Maritime Advocate online contains back issues of the online weekly and country and case summaries from supporting firms.

Last week the firm of Wang Jing in China agreed to supply both country and case summaries for the jurisdiction and we look forward to featuring their work in the future.

If you would like to join the growing list of law firms who are supplying summaries, please contact the publishers at:-

contactus@afterofficehours.com

http://www.avoarchive.com

Note from the Editor

Much about the regulators in this edition but the real challenge is how to foster individualism and entrepreneurial flair in an era which has become weighted with the ballast of mediocrity the covering of fundaments.

Enjoy!

2. Quarterpoints

Your editor's latest column visited the issue of regulation, which these days seems to be the heaviest item in the kitbag of brokers and underwriters.

Regulation Matters

What is the greatest sea change to come over marine insurance during the years of this new century? Without a doubt it is the fierce new focus on compliance, good governance and all things regulatory. The London market has been hard pressed to reform its ways and appear to its various customers as solvent, efficient, legal and responsive.

There are many voices nowadays extolling this fresh new leaf turning and far be it for me to regret the changes for the better in performance and reliability. But companies that live by compliance alone are not necessarily destined to prosper, and insurance is a business which requires an understanding of how markets change, how the cycle can crush the unwary and where simple entrepreneurialism is often required to lift insurers from the merely adequate to something more excellent.

By what hallmarks might we describe the over-regulated insurance organisation? This is the sort of organisation which cannot deliver its products as fast or as
responsively as its unregulated competitor, say in Bermuda. An over-regulated insurance organisation may well be a no-fun zone with customer facing executives having to sacrifice time at the market’s coal face in favour of internal regulatory requirements. One organisation I know quite well is said to have a good half dozen audit trails set up to serve the non-executive board, the quality assessor, the Financial Services Authority, the audit subcommittee, the underwriting committee and the reserving committee as well as the management committee. The fellows that serve this many headed beast are it may be understood, quite pale at the strain of so much internal reporting, not to say browned off.

Do they have a leg to stand on in these stricter times? Isn’t it incumbent on us all to fit in with the new dynamics of the insurance business and simply get on with it?

It depends. Nothing which has come in during the last ten years with a view to better regulating the industry has done much to make the business of underwriting or claims handling easier for those who do these jobs. And these are still the jobs with the mostest in the business, requiring skill, flair and endurance from practitioners.

A minority of these practitioners have the ability to produce better results for their principals than their peers. This ability emerges over time when the trend of the underwriting is made plain by the passage of time. The same is true of superior claims handlers, whose ability to hold back claims adds up to high client retention rates and lower acceptable loss ratios. It is the job of managers to make conditions for these individuals as favourable as they can be made.

The new focus on regulatory rectitude has done little to alter the realities of trading at the sharp end for individuals doing these jobs. Those with superior m anagers find themselves using reporting tools which make the job less of a strain and which deliver better estimating and forecasting data. Those with more mediocre superiors simply find themselves devoting more and more of their active day feeding the maw of internal reporting.

Why should they mind? Because at its worst the audit exercise can feed an alibi culture where the only people to blame will be the doers and the managed. How many insurance organisations have we seen where an adverse trend of events has resulted in a great churning of people at the working level and great survivorship amongst the higher ups? How often following a fall from underwriting grace do you witness the wielders of greater controls owning up to responsibility? Has the new emphasis on controls made it easier on the industry’s Teflon Men?

3. New Head of FSA

The new head of the FSA is Hector Santa, who was an internal candidate for the post of chief executive of the UK Regulator. Santa is a former investment banker. He comes from the post of MD of the wholesale and institutional markets. He replaces John Tiner. Regulatory experts in the insurers and brokers are wondering about the transition of the FSA from a rules based approach to one based upon principles.

We are not sure what these will be but here are a few which occur:

The UK insurance industry is in competition with other markets who aim to supplant it.

The business to business insurance market is an arm's length transaction. Few widows and orphans need to be protected.

Compliance pays no bills in the offices of brokers and insurers. In small organisations excessive amounts of regulatory oversight may actually sap strength which should be devoted to commercial survival.

Major insurance scandals are rarely anticipated by rating agencies (or regulators).

Entrepreneurs are rarer in insurance than other industries and getting rarer by the year. Regulatory hurdles to the establishment of new businesses seem to grow taller with each passing year.

The history of regulation in the UK is of lightness and a belief in laissez faire.

4. ISU Welcomes SCOPIC Renewal

From the e-zine edited by David Hughes called
Anderimar Shipping News:-

THE International Salvage Union has welcomed the introduction of increased tariff rates under the SCOPIC (Special Compensation P&I Club) Clause system of remuneration for salvage services.

The new rates, agreed by the International Group of P&I Clubs and endorsed by property underwriters and owners, took effect on 1 July and will continue until 31 December 2010. The new tariff will apply to LOF agreements entered into after July 1.

Under the new tariff arrangements, SCOPIC rates for tugs and other craft have increased by 25 per cent. Rates for salvors’ own portable salvage equipment have increased by 15 per cent and rates for personnel have increased by an additional five per cent, following an earlier increase of 10 per cent in this area, introduced on January 1 2006. The latter increase was the first since SCOPIC remuneration for high risk/low value salvage operations was introduced in 1999. The 1 July increases for tugs, other craft and portable salvage equipment represent the first updating of rates in these areas since 1999.

ISU President Hans van Rooij said: "SCOPIC rates apply in only one in five Lloyd’s Form casualty salvage operations, in those circumstances where the prospects for an appropriate ‘Article 13’ Salvage Award -- the traditional form of remuneration -- appear remote.

"The importance of SCOPIC is that it provides the all-important financial incentive when salvors are confronted with cases which might otherwise lack financial viability. Given society’s zero tolerance of pollution, it is important that salvors have this incentive to respond to all casualty-related pollution threats - even when property values are low and the risks are high."

david@anderimar.eclipse.co.uk

5. CLECAT Freight Forwarders’ Conference

Tuesday 27 November 2007
Diamant Conference & Business Centre
Diamant Building, Bd A. Reyers 80, 1030 Brussels

SUSTAINABLE LOGISTICS: AN ENVIRONMENT FOR BETTER BUSINESS

MORNING: Sustainability in logistics networks: what is the work ahead to achieve sustainable logistics in the EU transport policy, what help is to be expected from ICT and simplification, are logistics service providers the operational Single Window for EU trade?

AFTERNOON: Sustainable logistics, no panacea, but a helpful hand in addressing the problems of congestion and insufficient infrastructure

Our guests will be addressed by a number of Speakers;-

Matthias Ruete, D-G European Commission, DG TREN
Jack Short, S-G of the International Transport Forum Inés Ayala Sender, Member of the European Parliament Dirk Sterckx, Member of the European Parliament
Jan-Eric Sundgren, Senior VP Global Public Affairs, Volvo

Have already confirmed their participation.

FOR ADDITIONAL INFORMATION, PLEASE CONTACT:

CLECAT

Rue du Commerce 77

B-1040 Bruxelles
Tel: +32 2 503 47 05
Fax: +32 2 503 47 52

info@clecat.org

6. And Finally...

D Pyett writes:-

I don't see why Fraser should be the only funny man in Aussie, so here's an Oldie for you:

The Sailor and the Woman

A beautiful young New York woman was so depressed that she decided to end her life by throwing herself into the ocean. But just before she could throw herself from the docks, a young sailor stopped her.

"You have so much to live for," said the sailor. "Look, I'm off to Europe tomorrow and I can stow you away on my ship. I'll take care of you, bring you food every day, and keep you happy."

With nothing to lose, combined with the fact that she had always wanted to go to Europe, the woman accepted.

That night the sailor brought her aboard and hid her in a lifeboat. From then on, every night he would bring her three sandwiches and make love to her until dawn.

Three weeks later she was discovered by the captain during a routine inspection.

"What are you doing here?" asked the captain.

"I have an arrangement with one of the sailors," she replied. "He brings me food and I get a free trip to Europe. Plus he's screwing me."

"He certainly is," replied the captain, "This is the Staten Island Ferry."

P.S. Many thanks to Anthony Cerchiai for these:-

Important and realistic laws that Newton forgot to state -

LAW OF QUEUE: If you change queues, the one you have left will start to move faster than the one you are in now.

LAW OF TELEPHONE: When you dial a wrong number, you never get an engaged one.

LAW OF MECHANICAL REPAIR: After your hands become coated with grease, your nose will begin to itch.

LAW OF THE WORKSHOP: Any tool, when dropped, will roll to the least accessible corner.

LAW OF THE ALIBI: If you tell the boss you were late for work because you had a flat tire, the next morning you will have a flat tire.

BATH THEOREM: When the body is immersed in water, the telephone rings.

LAW OF ENCOUNTERS: The probability of meeting someone you know increases when you are with someone you don't want to be seen with.

LAW OF THE RESULT: When you try to prove to someone that a machine won't work, it will!

LAW OF BIOMECHANICS: The severity of the itch is inversely proportional to the reach.

THEATRE RULE: People with the seats at the furthest from the aisle arrive last.

LAW OF COFFEE: As soon as you sit down for a cup of hot coffee, your boss will ask you to do something which will last until the coffee is cold.

P.P.S. from Dec Dunphy

The lady walked into the bar and said, "Give me a double entendre." So the bartender gave her one.

BOW WAVE is published each week to over 14 600 Readers in the transport,insurance,shipping and finance industries.

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