This was one of the hot topics in our June edition. To recap, working with the ABI, BIBA and IIB, the FSA has challenged the industry to introduce their own set of rules to avoid uncertainty about what is covered in an insurance agreement - protecting and providing clarity for all parties involved.

Here's a summary of the practices that we'll be adopting in the next few months to meet the Contract Certainty Code of Practice.

The FSA has set an end-of-year deadline to implement and report back on contract certainty.

Changes at the pre-Inception stage (the period before the policy is live)

• We'll issue a new quotation and renewal invitation format - ensuring that all terms are understood by the client. To help brokers explain the terms of the policy to their clients, we'll also continue to publish our policy wordings on the e-broking website.
• We'll detail any subjectivites¹ of the policy in writing (for example, subject to survey or claims history).

Changes at the post-Inception stage (once the policy is live)

• Any subjectivities¹ that are outstanding at inception will be written up as fully-claused conditions of the cover.
• We'll dispatch contract documentation within five working days of inception for retail business and 21 elapsed days for commercial business.

Your role

It's important that the industry works together to achieve contract certainty. You can play your part by providing:

• proposal forms and detailed presentations in good time before the required inception date (for more information, please see the broker presentation template published at www.biba.org.uk)
• renewal terms well ahead of the renewal date
• any necessary additional information promptly.

If you'd like further information on what we're doing to support contract certainty, please contact your account manager.

You'll find more about the Contract Certainty Code of Practice at www.abi.org.uk.

¹ Under the Contract Certainty Code of Practice, a subjectivities condition is required to cover situations where a policy has been issued subject to actions by the insured or the provision of additional information (such as a survey).

Published: 09/10/2006