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Member, Beacon International Group, Ltd.
LONDON—Insurance buyers in the United Kingdom will benefit from an agreement by the Assn. of Insurance & Risk Managers and seven insurers to speed up settlement of claims.
London-based AIRMIC’s long-planned speed-of-settlement agreement sets out a framework by which property and business interruption claims of more than £2.5 million ($4 million) will be settled on a cash-flow basis. Under the terms, an adjuster will produce a model that allows the insurer to replicate the cash flow a policyholder would have seen in the absence of the loss.
Insurers signing onto the agreement are ACE Ltd., American International Group Inc., Allianz Global Corporate & Specialty, AXA Corporate Solutions, RSA Insurance Group P.L.C., XL Insurance Ltd. and Zurich Financial Services Group.
AIRMIC has pressed for the speed-of-settlement agreement since the credit crunch made it more difficult for businesses that suffer major property losses to access capital at reasonable costs while awaiting claims payments.
“The improved cash flow will make a big difference to companies that have been hit by big losses such as fire damage,” said John Hurrell, AIRMIC’s chief executive, in a statement. “In some cases, it may even make all the difference to an enterprise’s survival chances.”
AIRMIC said it expects use of the agreement to become common practice among U.K. insurers. Those that sign onto the agreement will be required to give a written explanation whenever they choose not to abide by its terms.