Radical rethink needed on annual contracts

A senior broking figure has called for a review of annual contracts, claiming that multi-year products would better insulate clients from the peaks and troughs of the underwriting cycle.

Speaking at a session on building reputation at The UK Insurance & Financial Services Conference & Expo recently, Toby Foster, chief executive of UK retail for Marsh, urged the industry to carefully and seriously examine the potential alternatives.

Responding to a question from Robin Foster-Taylor, managing director of Primo, who asked: "How can we treat customers fairly when we persist in perpetuating a cyclical market that continues to make us look stupid in the eyes of our customers and the City?", Foster-Taylor said: "We would be well advised, as a market place, to think very carefully about whether - for some segments of our markets - the annual contract is a sensible way forward. If we want to really make our businesses and our market places more efficient, we have got to think these radical thoughts."

- Foster-Taylor came under fire at the conference regarding Marsh's stance over contingent commissions. Paul Dickson said he did not like being lectured by Foster-Taylor as Marsh had been discredited due to bid-rigging. He responded: "I respect that view but I want to put across a view. I have experienced life close to the edge and, when that happens, you tend to see life more clearly. The lesson I have learned is that transparency is critical."