London – 26 April 2006
THE London market has appointed US claims data specialist ISO to develop and deliver its proposed wording repository. The Lloyd’s Market Association (LMA), leading the project, hopes to have the wording database up and running by the summer.
It is expected the single source of model wording will help the London market to achieve contract certainty. An LMA spokesperson said the database will be a “major contributor” to helping the market achieve contract certainty and to speeding up the policy production process.
The database is being developed by the LMA in partnership with ISO, with both bodies carrying some of the cost.
The project has the support of LMA’s members and Lloyd’s managing agents although there is no firm commitment yet to use the database once it is up and running. The project is still in its early stages and some big issues, such as how much users will pay and the governance of the database, have yet to be decided. The project is being developed by the LMA but use of the database will be open to brokers, Lloyd’s insurers and London market companies.
A market wording database already exists, run by Xchanging Ins-sure Services. It is a historical library of more than 12,000 of the most commonly-used wordings, clauses and policy forms and schedules. But according to the LMA its wording database will differ significantly as it will monitor the quality of wording, a key factor in contract certainty.
“The new wording repository will provide a single and established source of commonly-used model wording and clauses, assisting managing agents and brokers to achieve their contract certainty targets,” said LMA chief Simon Sperryn. The repository will be owned and controlled by the LMA membership. Crucially, its content will be actively managed by the LMA according to a strict governance structure and process, providing a “trusted source” of model wording and clauses available for use in support of contract certainty.
The intention is for the database to meet Acord data standards. The LMA is also looking at standards to ensure the quality of wording held on its database. The Market Reform Group is also looking at standard wording.
ISO is a major risk and claims data provider in the US, where it runs a number of industry databases as well as developing contract language and standard forms for filing claims. The firm was selected following a rigorous tendering process involving six suppliers. The LMA said ISO has established experience in this area and has shown a clear commitment to a tight delivery schedule.
The database will be available via the internet and for use on the underwriting box. Users will be able to download in Word and PDF formats.
Insurance Day – Comment: Wordings are key to success
26 April 2006
THE London subscription market has taken another big step toward achieving contract certainty in the long term and improving service standards for clients.
When the Financial Services Authority threw down the gauntlet and challenged the London market to achieve contract certainty by the end of this year, senior managers agreed that standard wordings would be needed if contracts were to be agreed at policy inception.
To facilitate these standard wordings – which already exist in large numbers in the London market – there would need to be a central electronic repository.
This infrastructure should be in place by August if the Lloyd’s Market Association (LMA) sticks to its schedule.
The trade body announced yesterday it has appointed US claims data specialists ISO to develop and deliver its proposed wording repository.
The project will be in competition with the market wording database already administered by Xchanging Ins-sure Services. According to the LMA its wording database will differ significantly because it will monitor the quality of wording, a key factor in achieving contract certainty.
The key to the success of the LMA project – and that of contract certainty – will be whether the market can agree on a manageable and workable number of quality standard wordings.
This challenge has yet to be met, although the LMA database should prove to be an essential tool.
Stuart Collins, 26 April 2006