New checklist encourages policyholders and carriers to include appropriate clauses at the outset
New guidance on (re)insurance contracts in the event of a eurozone exit has been published by the Lloyd’s Market Association (LMA) and law firm Clyde & Co.
The guidance contains a checklist for Lloyd’s managing agents to consider relating to governing law, jurisdiction, location of the parties, contract denomination and other matters and some example clauses.
The aim is to minimise risks in the event of an exit by encouraging policyholders and carriers to include appropriate clauses at the outset.
LMA director of legal and compliance Kees van der Klugt said: “This piece of work is not a reaction to a particular item of news – the eurozone crisis continues to ebb and flow. It is there for underwriters, brokers and their wordings specialists to consider during the renewal season.
“The aim should be to include appropriate clauses pre-inception where, for example, contracts are denominated in euro, or a party or insured property is located in the eurozone.”
Clyde & Co partner Nigel Brook said: “This guidance is potentially relevant to all euro-denominated contracts into which an insurer enters. Since many arrangements with inter-connecting reinsurance and service contracts are potentially exposed, if a eurozone exit were to happen, it is important that the parties give thought to how the arrangements could be affected by an exit and how to achieve their intended position.
“Steps can be taken, as shown in the note, to reduce the risk of the parties’ intentions being frustrated.”