Underestimation of risk born of the Great Moderation, loose monetary policy in the United States and a perverse pattern of international capital flows together provided fertile territory for the emergence of a credit/asset-price bubble. The creation of an array of complex new assets that were supposed to spread risk more widely ended up destroying information about the scale and location of losses, which proved to be crucial when the market turned. And an array of distorted incentives led the financial system to build up excessive leverage, increasing the vulnerabilities when asset prices began to fall. As in Agatha Christie's Murder on the Orient Express, everyone had a hand in it. Second, the economics profession has oversold the virtues of unfettered financial markets. We usually start from a presumption that markets work best when they are left to themselves, unless there are obvious market failures present. By the same token, even though not strictly the case in theory, we usually start from a presumption that expanding the range of available securities is beneficial. Yet that has resulted in a deeply unsatisfactory outcome. One view is that we need to bring psychology and the insights of behavioural economics into the study of financial markets (e.g. Akerlof and Shiller, 2009). That may indeed be part of producing a richer and more accurate description of financial market behaviour, particularly in regard to expectations formation.
These should support at least four key objectives, to enhance access to insurance; increase efficiencies in claims processing; promote fair competition and provide additional choice for consumers as well as provide a strong mechanism to prevent frauds and 3/5  BIS central bankers' speeches  cheats. This is important not only to deliver a superior customer experience, but also to control leakages, manage costs and ensure sustainability over a long term. It will also position the industry to compete and position itself more effectively as we move forward as the disruptive forces of competition, including from non-traditional players, continue to gain traction. It will also prevent leakages arising from abuses, misrepresentation and fraudulent claims. In the immediate term, the industry needs to set its sights on creating a convenient and seamless first-loss-notification process that leverages on shared infrastructure. Such a process should eliminate intermediate processes that are currently adding costs and enabling abuse and fraud to take place. Certain infrastructure should not be considered as a competitive edge. We have raised this issue many times. Sharing infrastructure and information among industry players is very important, but efforts towards this have been quite disappointing. The establishment of the ISM Fraud Intelligence System marks a significant first step in this direction. Deploying the latest data analytics and network analyses, the Fraud Intelligence System is a milestone in the industry’s efforts to combat fraud, especially in the motor business.