Association of British Insurers' (ABI) members have agreed a new code for general insurance claims that for the first time sets minimum standards across the insurance industry.

British Insurance Brokers Association (Biba) chief executive Mike Williams said the code was a welcome "step in the right direction" but said more action was needed to satisfy brokers.

He said: "We would like to see some means of checking the claims performance of individual insurers as well as some kind of sanctions for poor standards."

The ABI stressed the code, operational from January 1, 2001 was not a response to criticism of insurers' handling of recent flood claims.

John Parker, ABI head of general insurance, said the code had two significant features: "This is the first code to apply to both policyholders and third parties and to set minimum standards."

The code sets specific deadlines for processing and settling claims and responding to complaints.

Parker added that most insurers and loss adjusters exceeded the standards in the published code. But, he admitted that some firms would have to work harder to meet them.

Insurers' claims handling services will be regularly checked against the code's minimum standards to establish benchmark standards.

The first benchmarking exercise will involve insurers in the private motor market. However, results on individual insurers will not be published but aggregated and insurers undergoing mergers will be allowed to drop out of the standards exercise.

Parker said the code was voluntary because the ABI was a trade association and not a regulator.

Chris Woodburn, chief executive of the General Insurance Standards Council, said the code would complement its rulebook and improve confidence in the industry.