Lloyd’s outlines measures for promoting contract certainty

Lloyd’s chief executive Richard Ward has sent a letter to the market outlining proposals to promote contract certainty.
The letter includes proposals that would streamline the way insurance contracts are checked, produced and issued.
The changes outlined in Ward’s letter follow consultation with the market, Lloyd’s says in a press release posted on its Web site. “The proposals are intended to produce a better overall service for customers, [by] shortening the often lengthy process for ensuring the quality of insurance contracts.”
The standard number of checks, for example, would be reduced. The current number of checks is about 170 per slip, but Lloyd’s suggested reforms would reduce that by more than half.
“This will help managing agents and brokers in completing all the relevant checks before the contract is signed and finalized,” the press release says.
In his letter to the market, Ward said: “It is pleasing to see good progress in the market towards achieving contract certainty the average managing agent assessment of their achievement in April was 80%. However, I have been considering with leading market businesses and my senior team how best to drive reform of the placing process harder, in support of both the contract certainty target and wider process efficiency.”
Ward says Lloyd’s wants a timetable for implementation by the middle of this June, enabling pilot schemes for specific classes of business to start at the beginning of July. An updated set of standards would be published in the summer so that every Lloyd’s managing agent knows exactly what is needed of each contract.
The G6 group of Lloyd’s managing agents Beazley, Catlin, Hiscox, Wellington, Kiln, and Amlin is carrying out a pilot of a new approach to contract checking.
Jonathan Matthews, Beazley’s underwriting risk manager and G6 project leader, said: “This is a ground-breaking proposal which will revolutionize the way insurance contracts are checked and placed. By focusing on a smaller number of the most critical checks, we can speed up the process and empower agents to either carry out the checks in-house or outsouce to a third party for example, XIS.”
The Lloyd’s Market Association (LMA) has also welcomed the move. In an open letter to Ward, LMA chair Andrew Kendrick said: “The LMA has been carrying out an exercise to identify the market’s view on the future model for checking, producing and issuing contract documentation in the new era of contract certainty at inception.
“Our conclusion matches the model you describe in your letter and we support the line you are taking.”