AIRMIC says that this move responds to concerns raised by risk managers. A recent survey of AIRMIC members showed that 29 percent of respondents had concerns about the manner in which reservations of rights have been used and explained. The statement of principles is intended to clarify for insureds when and why a reservation of rights will be used and to improve dialogue between the insurer and insured.

The principles apply to large claims on policies issued in England and Wales and provide that whenever possible, the insurer will avoid issuing a reservation of rights within ninety days of the receipt of a claim. Instead, this period should be used by both insurer and insured to explore the information and evidence which would assist in coverage determination. AIRMIC believes that this will make it easier to settle matters informally with less need to involve lawyers.

Although voluntary, any insurer wishing to reserve rights under the statement of principles will explain the position. All seven of AIRMIC’s Insurer Partners have committed to support the principles and others will be invited to do so once they have become established.

“This is a great example of our insurer partners responding to our articulated client need”, said AIRMIC chair, Julia Graham. “It marks a significant step forward, and I urge risk managers to refer to it when making claims.”

“The AIRMIC statement of principles represents best practice. It is a commitment by AIRMIC insurer partners to transparency and a recognition that claims issues should be resolved in an open and straightforward manner.” said Peter Murray of ACE, who helped to co-ordinate the insurer response to the proposal.

Much of the detailed negotiation was led by Ron Hayes of JLT, who said he was pleased with the outcome. “The devil was always going to be in the detail.” he said “But we got there thanks to hard work and the overwhelming support of the market. This Statement of principles provides a workable framework and gives both Insurers and risk managers the clarity they need.”

To download the statement of principles click here (registration required for non-members of AIRMIC.

•Date:8th Dec 2008• Region: UK •Type: Article •Topic: Operational risk
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