Rob Gillies believes the changes will result in less efficiency
Non-renewal of the “standard policy conditions” section of the Insurance Block Exemption Regulation (BER) will raise fundamentally important issues for the London subscription market. Processes have evolved in this market over hundreds of years to meet the needs of a sophisticated client base in a fiercely competitive global industry.
The use of model wordings benefits policyholders as it helps consistent coverage across multiple insurers, speedy decisions and agreements, and a consistent approach to claims handling and agreement.
The commission seems to believe that insurers will continue to co-operate to develop model wordings and deliver these benefits to policyholders.
There is limited evidence for this and it contradicts our own findings that co-operation will reduce and policyholders and their brokers will be faced with a much greater challenge to align coverage across co-insurance placements.
In its desire to improve competition within Europe, the commission may well impact London’s ability to compete effectively with non-European markets. To be disproportionately disadvantaged in this way will be damaging.
I am therefore encouraged that the commission has indicated that it is open to our idea of developing better guidance to create the legal clarity necessary for insurers and brokers to continue to co-operate, through competition-safe mechanisms such as the Lloyd’s Market Association, to develop model policy language.
Rob Gillies is head of market processes at Lloyd’s Market Association