Contract certainty is now a visable part of business processes for many London market insurers and reinsurers, says John Hobbs
By the end of this year the London market must have demonstrated that the terms of insurance contracts it writes are quite clearly agreed before coverage becomes active.
Fortunately a great deal of work towards achieving this goal of contract certainty has already been achieved. Efforts to reform business practices have been ongoing for some time and added impetus came in January last year with the FSA setting an end of 2006 deadline for the project.
So, now the months ahead will be all about tackling practical implementation issues arising from agreed cross-market strategies to improve levels of contract certainty.
A checklist and code of practice were published in October providing a series of principles and guidance that can be followed by market practitioners.
It is clear that companies throughout London are now using these documents on a day-to-day basis and the nature of enquiries I am receiving is firmly focused on how they can be properly applied to real negotiations.
The IUA's work on contract certainty therefore is all about engaging with professionals on the ground - underwriters, brokers, wording technicians, and the contract certainty project managers, who are responsible for implementing the business process change within their companies.
Now and over the coming months we will be helping to formulate additional guidance that will support the information already provided in the checklist and code of practice. A list of contract certainty FAQs is being continually updated, covering issues such as foreign language wordings, late placements and backdating cover.
Additional work needs to be completed on the calculation and notification of signed lines and the challenges to contract certainty posed by risks with particularly complex placement characteristics.
There is no doubt that 2006 will be a very busy year if the market's contract certainty objectives are to be met, but I am confident that the business targets we have set ourselves, and shared with the FSA, can and will be delivered.