It sets out to clearly explain key definitions for a product that can be inherently complex and difficult for clients to understand.
Members of the IUA’s Liability Underwriters’ Group have identified exactly what is meant by ‘contingent’, ‘residual’ and ‘excess’ employers’ liability insurance.
The guide assesses some key underwriting and policy drafting issues, including how products for multi jurisdiction risks must interact with local legislation and compensation facilities. It also highlights problems insurers sometimes face in obtaining full information on foreign operations and the challenges this presents for accurately pricing a risk.
Chris Jones, IUA Director of Legal and Market Services, said: “Contingent employers’ liability can be a valuable and cost effective product, reducing the need to buy full local policies.
“Understanding the needs of the client is crucial to providing the right cover and insurers need to be in a position to fully understand and manage their exposures. Gathering as much information as possible benefits both the client, by ensuring they know what risks their policy covers, and the insurer, in providing a clearer picture of potential exposure and claims.”
The IUA report considers a selection of clauses used in the London Market and these reveal that the concepts of contingent, excess and residual are often used interchangeably without much explanation of their actual meaning.
Mr Jones added: “If the insurance industry is to expect clients to fully understand the product, it must have clarity on what each contingent employers’ liability term means. Different types of cover are designed to address different elements of the risk, so any confusion in this area reduces transparency about when a policy would respond.”
Copies of ‘An Introductory Guide to Contingent Employers’ Liability Insurance’ are available to download from the publications section of the IUA website (www.iua.co.uk/publications).
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