Airmic seeks to limit use of pay-out clause as conference begins.

AXA is one of several insurers supporting risk managers in their bid to limit the scope of a common clause used to delay the payment of large claims.

Other backers include Ace, AIG, Allianz, JLT, RSA, XL, Zurich, HSBC, Lockton, Marsh, Willis and loss adjuster Crawford, all of which are partners with Airmic, which was set to launch the campaign at its annual conference this week.

The reservation of rights clause puts a policyholder on notice that its insurer may not accept liability for a particular claim. But Airmic claims some insurers are routinely using the device for large claims, regardless of the particular merits of a case. The trade body is pressing insurers for a 90-day agreed timeframe between a claim being notified and any reservation of rights.

An Airmic spokesman said: “This would enable direct discussions to take place with a view to resolving the claim amicably without recourse to legal action and the associated costs.”

All seven insurers in the Airmic partnership have supported the concept in principle, and are working with risk managers on the detailed wording of the agreement, set to be completed this summer.

“The devil, inevitably, is in the detail,” said Ron Hayes, divisional managing director at broker JLT, which is

co-ordinating the negotiations. “This is taking time, but everyone supports what we are doing. We have to make sure that the agreement provides a workable framework and gives insurers and risk managers the necessary legal protection.”

Meanwhile, Airmic chief executive John Hurrell said the agreement would reduce the expense and time involved in settling large claims.

“We have no objection to insurers reserving rights when there is a good reason for it, but our members are telling us that it has become a knee-jerk reaction for some insurers. Only the lawyers benefit,” he said.

And, Tom White, head of corporate underwriting at Zurich Global Corporate, said amicable dialogue was the best course of action. “We all recognise that there are practical issues needing to be addressed but provided everyone’s legal rights are protected, then we fully support the Airmic initiative,” he added.

Steve Agutter, regional claims manager at AIG UK, said his company supported the initiative provided the wording of the agreement protected everyone’s legal rights.

David Geer, London market manager and underwriter at RSA, said: “We support anything that facilitates the resolution of claims in an amicable manner, and we are therefore very happy to work with Airmic to limit the use of reservation of rights to a minimum.”

A recent survey of Airmic members suggested that reservation of rights is on the increase: 19% claimed to have experience of it being used “inappropriately” in the past two years.