The FSA puts on hold its plans to develop rules on contract certainty.
When Global Reinsurance hosted its first contract certainty panel discussion in October last year there was every expectation that should the targets to achieve contract certainty not be met by their given deadlines, the market would suffer the consequences. “I do not think we will like it,” warned Lloyd's then CEO Nick Prettejohn when asked what sort of punishment the market might expect at the hands of the Financial Services Authority. This no longer appears to be the case.
The FSA has put on hold its work to develop rules to bring about contract certainty in the insurance market. While FSA CEO John Tiner acknowledged the progress that had been made by the market in meeting its challenge to achieve contract certainty, he said that in a move of “good faith” the regulator would “not be pressing ahead with our work on the contingency plan of regulatory intervention”.
Tiner warned that the FSA would nevertheless be keeping a close eye on the market's progress. But the fact it is no longer threatening to wade in with its big stick does potentially take the pressure off for the less committed. Warding off any signs of complacency were figures released in March showing that the market had exceeded its December target. Based on its first formal measurement of data provided by the market the Market Reform Group (MRG) found that 65% of contracts agreed during December 2005 were contract certain.
Dane Douetil, chairman of the MRG, certainly did not seem phased by the FSA's announcement. “We are determined not to lose any of the current momentum, and to ensure that the 85% end of year target in achieved” he insisted, saying that the FSA's “expression of trust” in the market's progress to date would “focus our minds on what further practical steps we might need to take to achieve our target”.