After a seven-month dialogue Lloyd’s, the International Underwriting Association and the Lloyd’s Insurance Brokers’ Committee have reached agreement on basic reforms of the way business is to be conducted in the London market.
LMP 2001, London Market Principles 2001, sets out a number of measures to be adopted “with the common aim to improve customer service, speed up the way the market operates, and create long-term cost savings.”
The report outlines the main points as follows:
–Clarity at point of contract so all concerned – underwriter, broker and customer – know exactly who is responsible for doing what and by when;
–A single underwriter – or a predetermined number of underwriters – responsible for the administration involved in a risk, instead of the current system where each participant is responsible for administering his or her own part of the risk;
–A single underwriter – or a predetermined number of underwriters – who will be responsible for managing the claims agreement process and administering claims;
— A London Market Standards Agency to collect and publish market-wide aggregate data so that participants can benchmark their own performance according to certain criteria (e.g. speed to pay premiums and claims and to issue documentation.)
–Premium payment terms agreed during placing. Consequences for non-compliance clearly set out.
Lloyd’s Chairman Max Taylor praised the new standards, saying “With these reforms we’re signing up to world class service standards to match the world class expertise that London has traditionally provided.”
LIBC Chairman Simon Harrap, representing the brokers, was equally enthusiastic. “Our customers still want to use London, but they are put off by our out of date working practices. I am confident this reform package will give us the necessary impetus to remain a world class centre,” said Harrap.
The new procedures will be phased in starting next year in conjunction with the formation of the partnership between Lloyd’s, the IUA and Xchanging to develop a new company to handle all back office procedures. When fully integrated, the new system promises to be “state of the art” for information processing, premium payments and claims adjusting.
A number of brokers have already signed LMP2001, including Aon, Benfield Greig, DP Mann, Hiscox Syndicates, Jardine Lloyd Thomson, RJ Kiln and Willis.
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