Archive: January, 2006
Contract certainty may be a major problem for the London insurance market, but Kinnect is no longer part of the solution.
Despite investing several years and many millions of pounds in its Kinnect insurance trading platform, Lloyd’s has now decided to shut it down.
Breaking 300 years of face-to-face, pen-on-paper contract negotiation tradition was never going to be easy.
When the blame game begins, ignorance is rarely a good defence. It does, however, seem to be a very popular defence. Which brings us to the third lesson in this series.
Don’t stick your head in the sand when your contract prices mysteriously go up, just as market prices around you are going down.
As the old saying goes: It takes two to tango. Which brings us to the second lesson in our contract scandal series.
Don’t offer a cushy job to the procurement official who just awarded you a contract at an inflated price.
When a contract scandal breaks, everyone ducks for cover. Who broke the rules? Who knew? Who should have known? Whose heads will roll? The media shines a bright light into the darkest corners of the deal, looking for someone to blame.
There are two classic targets when the blame game begins. Those who did the dodgy deal, and those who should have stopped it but didn’t. The former look corrupt. The latter incompetent.
For most people, the task of creating and negotiating contracts was transformed some ten years ago, when email “tipped” and became the preferred mode of business communication. Drafts are prepared in Word, then emailed back and forth. Most of the time, changes are marked up (although sometimes not, but that’s another story), and eventually a final version emerges, ready to sign.
Two years sounded like a long time. Less than one year doesn’t. So with 11 months to go till John Tiner’s deadline for contract certainty in the London insurance market, the question is being asked: what happens if the market misses the deadline? What if the deals are being done, but the details are still missing? Does it really matter?
It’s starting to sound like the answer is yes. It matters. The FSA is reaching for the stick.