Principles intend to clarify why a reservation of rights would be used and to improve dialogue between parties
AIRMIC has agreed a statement of principles in relation to the reservation of rights issue, after discussions with its partner insurers.
This move responds to concerns raised by risk managers. A recent survey of AIRMIC members showed that 29% 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 90 days of the receipt of a claim.
Instead, AIRMIC said this period should be used by both insurer and insured to explore the coverage situation.
AIRMIC suggested 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.
‘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.