The UK Financial Services Authority has revealed that the UK insurance industry has risen to the authority's 2004 challenge to end the 'deal now, detail later' practice in the UK and has found a solution to contract certainty, resulting in a more efficient market for buyers, brokers and insurers.
According to the Financial Services Authority (FSA) the insurance industry has reported that 90% of contracts in the subscription market and 88% in the non-subscription market are now achieving contract certainty. This brings greater certainty for buyers about what they have bought and for insurers about the risks they are covering.
Contract certainty, the timely agreement of the terms of an insurance contract and provision of the insurance contract details to a customer, has been a point of contention in the past. In 2004, the FSA’s chief executive, John Tiner, gave the industry two years to find a solution or face regulatory intervention.
The FSA has been monitoring the industry’s progress and, in a press release, John Tiner commented: This is a major achievement by the UK insurance industry. Through their concerted hard work they have addressed an issue here in the UK that affects insurance globally. It will serve as a catalyst for the ongoing wider reform of the industry and will further raise the competitiveness of the UK industry.
The FSA has said that contract certainty will continue to be a supervisory priority in 2007 and that it will ask the market to focus its efforts going forward on reducing the number of contracts that do not meet the market’s contract certainty standards.