Seven of the UK’s largest commercial insurers guarantee that big claims are settled promptly
AIRMIC has reached outline agreement with seven of the UK’s largest commercial insurers on a scheme to guarantee that big claims are settled promptly, helping companies avoid potential cashflow problems.
The document agreement sets out a framework for losses to be compensated. All parties have signed up to the principles although they will have further discussion on the detailed wording.
The credit crunch has made it more difficult for firms that suffer major property losses to acquire bridging capital from their banks except at prohibitive cost. ‘At stake is the ability of companies to make investment decisions and retain or recruit staff. In some cases it can make all the difference to an enterprise’s survival chances,’ according to association chief executive John Hurrell.
Under the deal, a loss adjuster would produce a cashflow model for the period of interruption caused by the event. This would show how much the insured had lost in terms of production and sales at any time. The insurer would undertake to protect the client’s cashflow position, ensuring that it remains similar to how it would have been in the absence of any loss. The Chartered Institute of Loss Adjusters has been closely involved in the discussion.
‘This is a big step forward and will bring badly needed to relief to companies that have suffered setbacks such as factory or office fires. Our members increasingly depend on their insurers in this type of situation,’ said the chair of AIRMIC’s insurance steering group, Kip Berkeley-Herring.
‘We have worked hard to directly address members’ concerns around interim claim payments and cashflow following large losses,’ said Tracy Jones, technical claims manager at Zurich, one of the people working with AIRMIC to produce a successful outcome. ‘We hope that, once finalised, application of the statement of principles will ease the process and provide customers with increased financial certainty, especially in the current economic climate.’
The insurers working with AIRMIC in this project are ACE, AIG, Allianz Global Corporate & Speciality, AXA Corporate Solutions, RSA, XL Insurance and Zurich. The loss adjusters Crawford & Company are also involved. AIRMIC hope to conclude the final agreement by the autumn.