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Brit claims 75 percent compliance on contract certainty

In a critical year for UK commercial insurers to demonstrate compliance with the regulatory imposed deadlines on contract certainty, Brit Insurance Holdings plc has stolen a march on its peers by announcing that it has reached 75 percent compliance on its 1 January renewals.

The Financial Services Authority (FSA) has told UK insurers that it must have 85 percent of its risks contract certain by the end of 2006. According to the definition agreed with the industry body Market Reform Group (MRG), risks are contract-certain when there is the complete and final agreement of all terms (including signed down lines) between the insured and insurers before inception.

In a statement today, Brit said its high levels of contract certainty were reached despite uncertainty following the US storm losses last year. The insurer pointed to its online (re)insurance placing engine RI3K as being “fundamental” to its achievement.

RI3K is currently thought to be in talks with Lloyd’s over the future of its stalled initiative Kinnect which a year ago was being promoted as a vehicle to ensure contract certainty for the London market.

Brit’s chief executive Dane Douetil paid tribute, saying: “I would like to congratulate our hard working team, brokers and reinsurers for their joint success in assisting us to both meet, and considerably exceed, our contract certainty targets. Hitting 75 percent plus contract certainty by 1 January required the involvement of 15 broking houses and over 50 reinsurers worldwide as well as a dedicated team effort internally at Brit and externally at RI3K.”

Earlier this month, the FSA’s insurance sector leader David Strachan reaffirmed his commitment to end the culture of “deal now, detail later” within the London market. At a meeting with the industry on the 7 December, the FSA indicated it would consider a number of regulatory interventions – including restrictions on commission drawdowns for brokers and capital charges for insurers – if sufficient progress was not made by companies within the deadlines set down.

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