Contract Certainty Code Of Practice
Abigail Tyrie
The Department received numerous inquiries about how it intends to ensure adherence to CL No. 20. On a prospective basis, the Department will focus its resources on those types of policies where, because of the unique nature or size of the risk, issues regarding contract certainty are most apt to surface. Such policies include those issued to: (1) large commercial insureds, written on a standard or manuscript basis; (2) the special risk market, written pursuant to Insurance Law Article 63; (3) policyholders in the excess line market; and (4) other insurers via reinsurance. In the latter half of 2010, the Department may issue letters of inquiry to licensees aimed at gathering information regarding how, and to what extent, licensees have developed and implemented practices to assure that contract certainty is routinely achieved.
A number of queries centered on the policy documentation necessary for contract certainty. The Department has endeavored to develop a contract certainty standard that strikes an appropriate balance between insureds, on the one hand, and insurers and producers, on the other. To that end, the Department, mindful of the global nature of the insurance industry, refers insureds, insurers, and producers to the principles and standards of contract certainty established in the United Kingdom, , and Bermuda, _ContractCertaintyCode of PracticeforBD FINAL.pdf. Those principles and standards will guide the Department to the extent that they are not inconsistent with the New York Insurance Law or regulations promulgated thereunder.
Because CL No. 20 states that contract certainty generally should be achieved within thirty days, and given that insurers and producers must work together to best serve the insured, many licensees requested guidance as to how the time frame should be allocated. In the United Kingdom, the allocation of time for placement of coverage is left to the marketplace. Accordingly, insurers and producers seeking to take steps to consistent with CL No. 20 and this Supplement should work out the allocation amongst themselves. The Department believes that generally speaking, where a producer intermediates a transaction, the insurer should endeavor to deliver policy terms and conditions to the producer within eighteen business days post-inception to enable the producer to do its part to implement the processes necessary to check the terms and conditions for accuracy, advise the policyholder, and, where necessary, to interface further with the insurer to assure a final meeting of the minds. The broker then would generally have twelve business days to deliver the contract to the policyholder. But it bears emphasizing that in any given circumstance, it is incumbent upon the insurer and producer to decide between themselves how to allocate the time afforded by the thirty-day period. Note, however, that in all events, should the time frames suggested by CL No. 20 and this Supplement conflict with the some provision of the New York Insurance Law or regulations promulgated thereunder, the latter provision will control.
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The code brings together all contract certainty guidance issued over the last two years and is the first ever from a UK market body to cover both the subscription and non-subscription insurance markets.
A copy of the Contract Certainty Code of Practice, which modifies the definition of contract certainty, outlines a series of contract certainty principles, and requires firms to demonstrate performance.
The Wordings Forum reports on a monthly basis to the Non Marine Committee (NMC) and provides a list of wordings in production. The Wordings Forum also refers policy wordings/clauses which have been drafted by, or received input from, the Forum to the NMC for approval.
Once approved by the NMC, new model wordings and clauses are released to the market via the LMA and these documents are made available for market use via publication on the Lloyd's Wordings Repository.
All wordings issued by the Wordings & Contracts Forum are added to the Lloyd's Wordings Repository (LWR). All Managing Agents have access to the Lloyd's Wordings Repository, providing underwriters with access to model wordings and clauses 'in current use', in all lines of business, against which slips can be referenced. The LWR includes all wordings developed by the LMA and a selection of wordings developed by other industry organisations, as well as many wordings from individual Managing Agents, other insurers and brokers. The LWR also provides Managing Agents with access to ISO wordings and a link to the BRMA website.
If you're an underwriter, wordings technician, or broker, you know that all the terms and conditions of an insurance contract - including policy wordings - need to be certain before policy inception. To help you achieve contract certainty, the Lloyd's Wordings Repository enables you to view vetted policy wordings and clauses regularly used within the London market.
The advanced search capabilities also allow you to search within different sections: core, managing agent, broker or third party. You can choose as many sections as you wish, as well as selecting active or archive content.
The Financial Conduct Authority requires the provision of clear, comprehensive and fully-agreed policy wordings before inception to all policyholders. To help individuals and organisations meet this requirement, the CII developed the Certificate in Contract Wording. It enhances knowledge of the practical application of wordings and the issues associated with them.
London Market Group (LMG) is a senior market wide body with the primary function to act as champion of the modernisation agenda in the London Market. A key feature of the modernisation programme has been the adoption of standard approaches to the method and timing of the presentation of the information required to place the risk.
General Principle on Central Bank Transparency: To strengthen their accountability, and as a prerequisite for their autonomy, whilst taking legitimate needs for confidentiality into account, central banks disclose their governance, policies, operations, and outcome of those policies and operations, as well as the official relations they maintain with government, domestic and international agencies, and other institutions.
The ownership and legal nature (e.g., established pursuant to company law; corporation of public law, sui generis institution) of the central bank are disclosed. This includes its general legal capacity to: (i) enter into contracts; (ii) institute legal proceedings and be subject to such proceedings; and (iii) acquire, administer, hold and dispose of movable and immovable property.
The legal instruments that are available to a central bank, i.e., non-binding instruments (recommendations), and legally binding instruments, irrespective whether they are generally applicable or are addressed to specific legal, or natural persons are disclosed.
Whether the central bank is prohibited to seek or take instructions from any private or public body is disclosed. The extent to which its autonomy varies with respect to various elements of its mandate is disclosed. Where appropriate, the central bank clarifies whether the central bank has goal or instrument autonomy with respect to its various objectives.
The central bank clarifies whether it and the members of its decision-making bodies are prohibited from seeking or taking instructions from any public or governmental authorities (including ministries and supervisory agencies) and from any other (including commercial) body.
The central bank discloses if representatives of third parties (i) can attend central bank decision-making bodies; and (ii), if so, are excluded from voting when participating in central bank decision-making bodies.
The central bank clarifies how its monetary policy goal is determined (i.e., whether it has goal autonomy) and whether it is autonomous in exercising such goal (i.e., whether it has instrument autonomy).
The central bank discloses its regulations and decision-making procedures for (i) the determination of its budget; (ii) the creation of provisions, including general and special reserves; (iii) the accounting treatment of foreign exchange gains and losses; (iv) the rules on distribution of dividends to the government; and (v) the provisions for central bank recapitalization.
The central bank discloses a clear overview of the organizational structure or allocation of responsibilities to its decision-making bodies: policy making, day-to-day management, and internal oversight of the central bank.
The central bank discloses a clear overview of the organizational structure or allocation of responsibilities to its decision-making bodies: (a) policy making; (b) day-to-day management; or (c) internal oversight of the central bank. This can include bodies with designations such as Board, Council, Court, Committee, if and where applicable.
The central bank discloses detailed information on the organization of it functions (where applicable), including detailed organization charts of those functions, as well as additional details on how decision-making bodies operate (e.g., voting arrangements, frequency of meetings, and how dissent is dealt with). The central bank discloses which decision-making body is responsible for general and for individual regulatory decisions.
The central bank discloses the principal risks that it needs to take to meet its objectives (such as financial, operational, and legal risks), and the framework to manage these risks. This includes information on the risk governance structure and risk strategy.
The central bank discloses the principal risks (such as financial, operational, and legal risks) that it needs to take to meet its objectives, and the framework to manage these risks. This includes information on the risk governance structure and risk strategy.