Answer the emails before you Twitter

Answer the emails before you Twitter

If you think twittering is for the birds, then think again. US President Obama and Stephen Fry (a renowned British actor) are both active users of the micro-blogging website – twitter.com. Earlier this month, Stephen Fry was stuck in lift in London and used Twitter to talk to his followers – all 180,000 of them – about his predicament. Ever helpful, his followers offered advice on surviving in broken lifts and generally uplifting comments. Welcome to the world of social networking.

But it’s not all fun and games. Recently, a US congressman took to announcing in detail his movements on a visit to Irag. This caused an outrage over the unintended security risk he caused for himself and his delegation.

Companies are using Twitter for their own purposes. You can follow the CEOs, hear what employees are saying about the company or interact as a customer. Twitter has caught onto this corporate surfing and has made mutterings about charging corporate users. Clear benefit of this channel remains unproven and such a move would certainly dampen corporate interest.

In the corporate world, Twitter is said to be able to play a role in customer feedback, queries or product questions. However, these activities could just as well be served in on-line forums which are better at structuring and associating data. Twitter boards can sometimes look like random streams of the unconscious that can only make sense to the Twitter owner. Most companies will allow you to submit queries to them via email but either don’t respond, or respond in a useless timeframe. I’d happily use alternative channels (email, twitter, skype) to communicate with companies instead of having to deal with those interminable call centres. But then the company must actually respond.

The Wall Street Journal noted “… some users are starting to feel ‘too’ connected, as they grapple with check-in messages at odd hours, higher cellphone bills, and the need to tell acquaintances to stop announcing what they’re having for dinner”

I’m with WSJ on this one. Twitter is yet another communication channel in an over-communicated world. The technology may be a viable consumer communication channel but it competes with alternative and more established channels. My message to firms considering this is to get your other channels working first.

As expected, Solvency II is under threat

As expected, Solvency II is under threat

In April 2008, Celent published a report about the new regulatory approach for insurers and reinsurers operating in the European Union called Solvency II.

Surprisingly or not, the draft text submitted to and approved in the beginning of December by the European Council of Economic and Finance Ministers (ECOFIN) does not contain the group supervision provision any longer. With Solvency II, capital requirement is based on a risk-based system as risk is measured on consistent principles. Knowing that, the removal of the group supervision requirement is an important change to the overall Solvency II regulation. Indeed, the idea behind Solvency II is to encourage large and diversified groups because they can pool their capital resources which should in turn benefits to policyholders. This approach is directly derived from the Basel II regulation implemented for the bank industry.

In other words, it seems that some factors have played an important role during the last six-month period and led the policy makers to reconsider the pros and cons of the group supervision provision. First of all, a few internationally diversified banks have nearly collapsed in the recent past demonstrating that the Basel II regulation could not prevent even well-diversified institutions from experiencing solvency problems. In the insurance sector, the American International Group (AIG) has been seriously hit due to its vast financial exposures that were written at the group level. In addition, after the massive interventions of governments to save some of the biggest European financial institutions, political pressures have emerged. France, for instance, seems to be in favor of the deletion of the group support element of the directive. This decision is also due to the fact that mutuals – which are preponderant in France – tend to have lower solvency ratios and capital requirements. Smaller countries in Eastern Europe are also concerned since they fear losing control over some of the entities. According to a report published by FSA in April 2008 (Enhancing group supervision under Solvency II), foreign insurance subsidiaries own 98.6% of market share in the Slovakian life sector and 100% in the non-life. These figures help us better understand the small Eastern European countries concern.

Overall, the immediate consequence of the ECOFIN decision could trigger new rounds of political discussions and delay the effective implementation of the Solvency II directive. In this context, Celent thinks that 2012 might be a too optimistic objective. However, we still encourage insurers to prepare for the Solvency II implementation because the new set of capital requirement regulation means changes and will trigger new investments anyway.

Integrity In Times of Turmoil

Integrity In Times of Turmoil

It is easy to do the right thing when everything is going well. It gets harder as conditions deteriorate.

That basic truth applies to just about everything. I think it is relevant to the times we’re in, whether you’re an insurer competing for scarce premium dollars, a vendor trying to differentiate your products to customers, or an analyst firm that provides a neutral voice on business and technology trends.

How about an example that touches our industry? A homeowner I know was horrified to discover that the custom-made cabinets in his brand-new home were off-gassing immense amounts of formaldehyde, nearly a year after he moved in. His builder, the cabinet subcontractor, the supplier of the materials used in the cabinets, and their respective insurers all cashed their checks after the house was built. But despite their clear shared responsibility for the problem, they all ran for the hills when the formaldehyde was discovered.The homeowner moved out and took a third mortgage to remedy the problem while the lawyers argued over who should ultimately pay for the fix.

There’s plenty of shameful behavior in that story. But focus on the insurers. Were they justified in denying liability and pushing the case into suit? I think they all need a gentle reminder that the true measure of who we are–as companies and individuals–emerges in times of trouble, not in times of plenty.

For those of us who appreciate a good challenge and who want to demonstrate their commitment to doing the right thing–always–these are the best of times. And times of revelation, in a sense. As the prospects for a quick economic turnaround dim, we’ll all have new insights into who thrives on doing the right thing, and who does not. This is a distinction that matters.