IUA introduces two new London market model clauses

The International Underwriting Association (IUA) has published two new London market model clauses to help insurers, brokers and clients deal with claims preparation costs.

In a statement released yesterday (31 July 2023), the IUA said it made the move after members reported that “a wide variety of different claims preparation clauses were employed and that reporting of such expenses has sometimes lacked detail”.

Claims preparation costs refer to the expenses incurred by an insurance company or policyholder when preparing and processing an insurance claim.

The IUA said the new clauses should provide “greater clarity and certainty about the nature and extent of what payments can be considered as claims preparation costs”.

“Claims preparation costs can be an important policy benefit, covering the fees charged by qualified professionals to produce and certify evidence in support of a claim,” Tom Hughes, senior market services executive at the IUA, said.

“This can enable a more efficient claims process, allowing policyholders to focus on running and recovering their business.”

Clause details

The IUA is a representative body for companies in London providing international and wholesale insurance and reinsurance coverage. 

Its two new clauses will be named IUA 09 091 and IUA 09 092.

The first will impose fewer requirements on a client and will not require written consent from an insurer before services are commissioned.

The other will require a breakdown of proposed costs to be submitted in advance of any expenditure being undertaken.

Hughes said that for the clauses to operate well, ”they must contain explicit parameters about the types of costs covered”.

“The IUA’s model extensions seek to achieve this by encouraging a greater provision of information and allowing for a limit of costs to be agreed between the parties involved in a contract,” Hughes said.