Many of its customers, aged 75 and over, had invested their life savings into these products but were left with significantly reduced retirement income. Ten years later, the Government agreed to pay compensation amounting to £ billion. But many policyholders and their families suffered over the decade when their fate remained uncertain, and some of those affected were no longer alive to benefit personally from the compensation. Another way to think about this is to consider the importance, at a human level, of what insurance companies do – and therefore, how we would feel about it if an insurer couldn’t make good on its promises. Much of this is about the everyday business of work, family and home, and I have spent some time this year with policyholders to remind myself of this. The most striking thing about talking to a group of policyholders is simply the vast range of insurance needs people have, from burst pipes to with-profits funds. One is also 1  Based on ABI data, as at end 2016. 3  All speeches are available online at www.bankofengland.co.uk/speeches  3  struck by how complex people find insurance, and some of the different experiences that can arise. One person I spoke to had a really excellent experience with a UK home insurer. Another’s family had been injured in a motorway pile-up, and was having terrible difficulty trying to find out if the non-UK insurer of the driver who had hit them is or is not solvent.
In a world where a German trader can trade on an exchange in London with a counterparty in the US who uses a French technology provider and a Belgian settlement agent, the question of how to ensure that all parts of the process are regulated effectively is a tough one. Some argue there should be some kind of pan-national “super-regulator”. Perhaps that is where we will eventually get to although one worries about its potential for the worst sort of bureaucracy: and in the meantime we think that an approach based on close cooperation and the exchange of regulatory information, is a pragmatic way forward and more likely to balance the need to protect investors and the need to encourage innovative, responsive markets. But let me turn my attention back to the opportunities that technology offers. The scope for new contracts on B2B and e-commerce networks is enormous. Contracts that would have taken some time to establish themselves in a pit can be quickly listed on screen at relatively little cost. Trading is now possible in such diverse commodities as electricity, telecoms bandwidth and even the weather. The organisers of this event may, in future, be able to hedge their exposure to fluctuating wine prices using exchange-traded futures based on the finest premier cru, I suspect this is one contract where traders would be happy to go to physical delivery. We central bankers will have to stick to our usual vin ordinaire.