LONDON—London's Market Reform Group has sent out a code of practice and a checklist to help insurers and brokers meet an end of 2006 deadline for achieving contract certainty.

Nick Prettejohn, chief executive of Lloyd's of London and chairman of the Market Reform Group, has written to the chief executives of all London insurance market companies with a code of practice and guidance on achieving contract certainty, and urged them all to "communicate the definition and principles of contract certainty to the board of your company and obtain its commitment to them."

The Market Reform Group's program office before the end of the year will contact all CEOs of London market companies to ensure that this has taken place "so that the market can give further assurance to the Financial Services Authority that all firms are committed to achieving the contract certainty target."

The FSA, the U.K.'s insurance and insurance broker regulator, has set a deadline of Jan. 1, 2007, to achieve contract certainty for insurance buyers at policy inception.

According to Mr. Prettejohn's letter, the FSA "has indicated that it will be formally reviewing progress at the end of 2005 to determine whether, in its view, the market is on track to achieve satisfactory performance by the end of 2006."

The Market Reform Group, which comprises representatives of Lloyd's and London company market insurers and brokers, defines contract certainty as "the complete and final agreement of all terms (including signed lines) between the insured and insurers before inception."

In addition, according to the group's code of practice, "the full wording must be agreed before any insurer formally commits to the contract," and "an appropriate evidence of cover is to be issued within 30 days of inception."

Among other principles included in the code of practice are the requirement that "brokers will notify all terms to their client and obtain their client's agreement before inception," that "brokers and insurers will ensure that postinception amendments are documented and agreed as endorsements," and "brokers and insurers will each collect and maintain data on their contract certainty performance at individual contract level."

The contract certainty checklist encourages brokers and insurers to verify that there are no ambiguous terms in contracts, that broker payments are clearly expressed, and that all broker/insurer agreements are clearly stated in the submission, among other things.

Further guidance from the Market Reform Group is slated for November.