As the London market prepares itself for the final contract certainty push, the importance of model wordings has never been so high on the agenda. Contract certainty is defined by the Market Reform Group as "the complete and final agreement of all terms (including signed down lines) between the insured and insurer before inception". With the market on the brink of meeting the target - shared with the Financial Service Authority - of at least 85% certainty by 31 December 2006, model wordings have been recognised as a key tool in the armoury. At last year's Global Reinsurance "Countdown to Contract Certainty" panel discussion in London, Dane Douetil, chief executive of Brit, underlined the importance of using model wordings, but without losing the ability to create a customised product. "Standard-based wording will help us get there," he explained. "What we're trying to say is let's start with certainty and move to a bespoke contract. At the moment we start with a blank piece of paper and then desperately try to fill it up with bespoke clauses."
Helping the market on the road to achieving a set of agreed model wordings are a number of new wordings "banks", including Xchanging's Model Wordings Library, the Lloyd's Market Association's Wordings Repository and The Insurance Workplace. While these banks are intended as a source of commonly-used model wordings and clauses, a question mark remains over whether the market views the overuse of model wordings as an impediment to its competitive position as a provider of tailored insurance contracts. Global Reinsurance invited some of the key players in the market together to discuss the importance of model wordings and the challenge of achieving certainty whilst continuing to offer clients any required tailoring of the product.
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