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Member, Beacon International Group, Ltd.
In response to member concerns about the unfair use of reservations of rights letters by insurers in cases where those members felt cooperative discussions of claims might have been more helpful, Airmic Ltd. has developed a voluntary set of principles intended to govern the use of reservation of rights letters.
After surveying members, the London-based risk management and insurance association also created a draft policy clause meant to bind both parties in insurance contracts regarding reservation of rights letters.
The suggested clause is included in an Airmic reservation of rights guide, along with an explanation of how the clause is meant to operate.
In a statement, Airmic said members and their insurers are free to change the wording of the clause as part of discussions intended to achieve the objectives of both parties.
The guide also provides advice on how to avoid the issuance of reservation of rights letters and what to do if a policyholder receives such a letter.
The Airmic guide can be downloaded here.