CHAPTER 8 - E Flashcards
What is contract certainty?
All parties to a contract knowing exactly what is going on at the point the contract comes into force.
What historical issue did the London Market face regarding contract documentation?
Focus on developing innovative insurance solutions rather than documenting contract details.
What are some impacts of unclear contract terms?
Uncertainty in claims and differing interpretations leading to insurance disputes.
What terms were commonly found in slips before improved contract certainty?
- ‘Wording as expiry’
- ‘Wording TBA’
What challenge did regulators set for the UK insurance market in 2004?
To end the ‘deal now, detail later’ mentality.
How is contract certainty achieved?
Complete and final agreement of all terms between the insured and insurer at contract entry, with prompt documentation.
What must be ensured before entering into a contract?
All terms must be clear and unambiguous at the time the offer is made or accepted.
What should be included in the MRC terms?
Clear and unambiguous terms, including any conditions or subjectivities.
What does WNKORL stand for?
When the risk is being placed after inception.
What is a subjectivity in insurance contracts?
A requirement, such as a satisfactory survey, that must be fulfilled to avoid penalties.
What is the timeframe for providing contract documentation for commercial business?
30 calendar days after inception.
What is the timeframe for providing contract documentation for consumers?
7 working days after inception.
What processes should insurers and brokers have in place to demonstrate compliance?
- Audits
- Checklists
What must be done regarding contract changes?
Changes need to be certain and documented properly.
What should be included in contracts with more than one insurer?
An agreed basis for determining each insurer’s final participation.
What is the broker’s responsibility after entering into a contract?
Ensure risk information is quickly passed to Xchanging for registration.
What should insurers use if they want their written line to be their final share of the risk?
‘Line to stand’.
What should be done if principles of contract certainty are not met?
Insurer and broker must resolve exceptions as soon as practicable.
True or False: Contract certainty is now considered a reform project.
False
Fill in the blank: Contract certainty is now ‘business as _______’ rather than a reform project.
usual
