Under the latest phase of the UK’s drive to embed contract certainty into the day-to-day processes of its insurance industry, the Contract Certainty Steering Committee (CCSC) has published a code of practice designed to ensure policies continue to be fully agreed prior to coverage becoming active.
The code brings together all contract certainty guidance issued over the last two years. It is the first set of UK regulations to cover both the subscription and non-subscription insurance markets.
Endorsements of the new code have been received from the following organizations:
— The Financial Services Authority;
— the Association of British Insurers (ABI);
— the British Insurance Brokers’ Association (BIBA);
— Lloyd’s and the Lloyd’s Market Association (LMA);
— the London Market Insurance Brokers’ Committee (LMBC);
— the Market Reform Group (MRG);
— the International Underwriting Association (IUA);
— and the Association of Insurance and Risk Managers (AIRMIC).
The code is in response to admonitions from the FSA that the longstanding practice of “deal now – details later” was no longer acceptable.
The London insurance industry, led by Lloyd’s and the IUA, set a target of 85 percent of all contracts to be certain by the end of 2006. Lloyd’s reported that even before that date 65 percent of all contracts within the market were already contract certain – “double the 30 percent objective.” By December 2006, 90 percent of contracts in the subscription market and 88 percent in the non-subscription market were achieving contract certainty.
Dane Douetil, Chief Executive of Brit PLC, the Chairman of CCSC and the London MRG, commented: “Following the industry’s success in meeting the FSA’s challenge to materially achieve contract certainty by the end of 2006, the market continues to make excellent progress and is successfully embedding contract certainty in its day-to-day operations. The code marks the next phase of that work. Developed following industry-wide consultation, it builds on the lessons of the last two years, creating an easy-to-follow guide to best practice.”
“The UK will benefit enormously from further modernization of the insurance industry and contract certainty is an important part of that process. Ultimately, it is our customers that reap the benefits, and it therefore must remain a key priority.”
Further comments and the code document may be obtained on the market reform web site at: http://www.marketreform.co.uk.
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