The London market has been provided with a new wordings database. Simon Sperryn details how this will help achieve contract certainty targets.
There is no let-up of the pressure on insurers to achieve the targets for contract certainty which have been agreed by London's Market Reform Group. The Financial Services Authority continues to monitor progress and there can be no doubt they will take action if they deem progress to be inadequate.
Contract certainty requires the complete and final agreement of all terms between the insured and insurers before inception. Achieving this involves major process and cultural change and there is clear evidence this has and is continuing to happen. However, the subscription nature of the London market and the negotiation process involved in the placement of risks adds a layer of complexity which doesn't exist in other markets.
Development of the Lloyd's Market Association's (LMA) wordings repository will help the market to achieve its contract certainty targets by providing a single, established and trusted source of wordings and clauses, against which slips can be referenced.
Originally an initiative by a group of leading managing agencies (Amlin, Beazley, Catlin, Hiscox, Kiln and Wellington, subsequently joined by Brit and Limit), the repository project has been adopted by the LMA for the benefit of the whole market. Phase one is now complete and culminated in preparation of a functional specification and the appointment of ISO to develop the repository application. ISO have established experience in this area and have demonstrated a clear commitment to meet a tight delivery schedule. The repository will be available for market use from August 2006.
The application will be accessible via the internet and users will be able to download wordings in Microsoft Word and Adobe PDF formats and sophisticated search facilities will be included. Further development of the application for more advanced use is envisaged at a later stage.
The LMA sees the wordings repository as fulfilling different needs to current offerings. The LMA repository will be owned by Lloyd's underwriters, run on a not-for-profit basis and will have its contents actively managed. The aim is a trusted source of quality assured wordings in general use.