The ides of Marsh.

By Floro L. Mercene

The big players of our local insurance industry usually live up to the stereotype of being a conservative, moderate, and an "all-business- all-the- time" group. Indeed, top executives from this line of work rarely have anything polarizing to argue about, or any hot topics to warrant muted chatter or coffee-shop discussions.

Lately, however, almost every key player in Philippine insurance is closely monitoring how the Insurance Commission (IC) will handle the brouhaha caused by UK-based broker Marsh. To say that the IC's eventual decision is a game-changer is based on the hubris Marsh displayed in carrying out its activities and the implications that may arise from it.

Marsh is said to be flying in executives from their overseas offices and offer insurance services to large Philippine corporations. Local companies, however, cannot sign directly with them, since they have no insurance operations (read: legal authority) here. So they use a "fronting insurer" to get the paperwork done, and give this company a small fee for their troubles. I mentioned "hubris" in the paragraph above, only because Marsh has fully and openly admitted to doing this.

Even to a non-lawyer, Section 100 of the local insurance seems to be pretty clear about banning this type of activity. Moreover, it sets a dangerous precedent by allowing foreign corporations to do business here without any licenses - and make no mistake about it, this danger applies to fair competition, government regulation, and most especially, client accountablity.

At present, the IC is in the midst of investigating this matter. Whether it's a good thing or a bad thing, Marsh is certainly no stranger to regulatory inquiries. In the past year alone, the company has faced investigations and hearings conducted by the Financial Conduct Authority and the High Court in the United Kingdom, as well as the Securities Appellate Tribunal. They have also had to deal with a number of private complaints, facing international cases filed by the likes of AON Consulting and Israel Aircraft Industries, so this is nothing that they have not dealt with before.

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Floro L. Mercene