Such costs can be paid to policyholders for expenses incurred in preparing and presenting a claim. The IUA’s new clauses aim to provide greater clarity and certainty about the nature and extent of what payments can be considered as claims preparation costs.
They have been developed by members of the association’s Clauses Committee and are freely available to be used as published or amended by market participants. IUA members had previously reported that a wide variety of different claims preparation clauses were employed and that reporting of such expenses has sometimes lacked detail.
Tom Hughes, Senior Market Services Executive and at the IUA, said: “Claims preparation costs can be an important policy benefit, covering the fees charged by qualified professionals to produce and certify evidence in support of a claim. This can enable a more efficient claims process, allowing policyholders to focus on running and recovering their business.
“For clauses to operate well they must contain explicit parameters about the types of costs covered. The IUA’s model extensions seek to achieve this by encouraging a greater provision of information and allowing for a limit of costs to be agreed between the parties involved in a contract.”
Two different versions of a claims preparation costs extension have been issued (IUA 09 091 and IUA 09 092). One imposes fewer requirements on a client and does not require prior written consent from an insurer before services are commissioned. A second model clause requires a breakdown of proposed costs to be submitted in advance of any expenditure being undertaken.
Both model clauses are available to download from the IUA’s online clauses database, together with an accompanying commentary that explains their development. The documents were prepared following feedback from expert practitioners amongst the IUA’s member underwriting and claims groups; in particular its Property Underwriting Group, Property Claims Group, Joint Energy Claims Group and Claims Strategy Committee. Further consultation was also undertaken with London Market broker representatives.
Scan here to download the app