Market nears final decision on single terms of business agreement
An agreement between brokers and Lloyd's insurers over a single terms of business agreement (TOBA) to cover the entire Lloyd's market could be reached in the next few weeks.
According to David Hough, executive director of the London market brokers' committee, discussions with the Lloyd's Market Association (LMA), which also include Biba, are close to agreement.
"There will be one TOBA for the market. It has been about fine tuning the existing TOBA to fit with new FSA rules - to bring more clarity," Hough said.
LMA chief executive Simon Sperryn said: "Both sides want agreement. We have done this before, a few years ago. At this stage we are just going through the difficult bits, trying to get a consensus."
It is understood that the two main areas of contention are who takes responsibility for credit risk on premium, namely risk transfer, and the issue of non-solicitation, which has caused controversy in the composite market.
Hough said: "This is an issue, but not as much as it has been in the retail market." Sperryn added: "These difficulties are not insurmountable."
The FSA rules require all insurers to revise their TOBAs before the beginning of broker regulation on 14 January 2005.
Insurers in the composite market have issued individual TOBAs, and those issued to date include non-solicitation clauses. Most composite market insurers have also agreed to accept the credit risk for client money before it is paid to them, ensuring the consumer is protected in the event of a broker insolvency.