Insurers must deliver policy wordings to brokers within strict time limits, under a code of practice designed to achieve contract certainty in the regional market.

Failure to expressly state all contractual terms on inception will also be outlawed. Those failing to achieve the targets set by the code will have their names passed to the ABI.

Under the code, retail client policy wording must be delivered within five working days of inception or renewal. Commercial wordings must be provided within 30 days.

The code also said that wording "must be agreed at or before cover commences" and confirmed in writing. Terms such as "to be agreed" can only be used until inception.

Royal & Sun Alliance chief executive Duncan Boyle, who chairs the industry working group, said the insurance industry had been offered one last chance to show they are progressing towards contract certainty, or they would face FSA regulation.

He said: "We want to drive out the sloppiness and create sharper practices across the industry."

Boyle said that in June 2006 the working party will commission a questionnaire response to the code. The questionnaire, seen exclusively by Insurance Times, asks brokers to name and shame "under-performing insurers".

The FSA will be involved in the review and will be watching progress closely, added Boyle.

Timetable for contract certainty

  • Wording must be agreed at or before cover commences
  • Retail customers should receive correct policy wording within five working days of inception date
  • Commercial customers should receive correct policy wordings within 30 elapsed days of inception
  • Insureds, or their broker, should notify insurer of policy errors within 14 days of receipt of policy
  • The insurer must issue corrected policy documentation within 14 days of notification of errors.