Retail chief executive says fines will help insurers adapt to contract certainty deadline
The industry should consider introducing "meaningful financial penalties" for insurers that fail to deliver policy documentation on time, according to Marsh UK retail chief executive Toby Foster.
Speaking as part of a panel session on brokers and contract certainty at the Airmic conference, Foster said the introduction of penalties would help the industry adapt to the contract certainty deadline of 2007 set by the FSA.
"We need to think about meaningful financial penalties for firms that fail to meet a deadline for producing documentation," said Foster.
"If we are going to meet the January 2007 deadline, we have to be prepared to pay a meaningful penalty to a customer if we fail to meet the target."
Ace UK and Ireland president Carl Bach supported Foster's comments.
Bach said Ace had already paid a similar type of compensation to a client whose policy documentation had been delayed.
The panel also predicted that insureds could end up paying more for bespoke policies once the contract certainty rules take effect.
JLT Risk Solutions chief executive Mike Hammond said the insurance industry had not been good at recognising this issue. "Bespoke wording will cost more and we will have to invest more in the expertise, and in testing the products."
Aon's John Thornton said he believed there was a real risk of the industry ending bespoke wordings.
"We need to get standardisation in 80% of the industry and focus bespoke wordings on areas where they are really needed."