LONDON—The United Kingdom's insurance regulator says it is satisfied that the market has done enough to meet contract certainty targets to avoid regulatory intervention for the time being.

But in a letter to the chief executives of all brokers and insurers conducting nonlife insurance business in the United Kingdom, the regulator warned that "there are areas where more work is needed to ensure the market-led solution is successful and continues to be beyond 2007."

Before the FSA's "Dear CEO letter" was sent out late last month, executives from the London and wider U.K. insurance market expressed confidence that the industry would meet its contract certainty targets and stave off intervention by the Financial Services Authority.

In December 2004, John Tiner, CEO of the FSA, challenged the U.K. insurance industry to find a solution to the issue of contract certainty by the end of this year.

The FSA has made clear that it always has favored a market-led solution to meeting this requirement.

The Market Reform Group, set up by members of the Lloyd's of London and London insurance markets to find a way to address the issue, defines contract certainty as "the complete and final agreement of all terms (including signed lines) between the insured and insurers before inception."

In its letter to CEOs, the London-based FSA said it recognized that "many firms have made significant progress towards achieving contract certainty since the start of our challenge."

But Sarah Wilson, the FSA's insurance sector leader and author of the letter, said that there were some failings among certain sectors of the market.

In the letter, Ms. Wilson said that "some parts of the market are less engaged than others, believing that contract certainty does not apply to them. In particular, some smaller firms and, notably, brokers outside the London market appear to be less engaged in this initiative than they should be at this late stage."

The FSA said it had found "good evidence of data verification among firms of all sizes."

But the regulator did cite some examples of poor practice and failure of firms to accurately measure contract certainty.

Leading figures in the London insurance market, however, were confident that the market had succeeded in its effort to tackle contract certainty.

However, they note that the process should not stop and that policyholders, intermediaries and insurers need to keep up the pressure on each other to make sure that the concept of contract certainty is embedded in the market.

Dane Douetil, chief executive of Brit Insurance Holdings P.L.C., chairman of the Market Reform Group and constituency representative of insurers on the London market's Contract Certainty Steering Group, said that Mr. Tiner and the FSA should be pleased with achievements to date.

"We will exceed the self-imposed targets," he said. But he did warn those brokers and insurers that may have not taken the project seriously enough and have hidden behind the majority that the FSA will not let them get away with it, even if the market as a whole meets the regulator's criteria.

Mr. Douetil said that the steering group will continue to operate until the end of next year to ensure that the concept is truly embedded in all companies' processes.

During this year, the FSA strongly urged risk managers to play a central role in the pursuit of market reform.

David Gamble, executive director of the Assn. of Insurance & Risk Managers, said that he believes that the risk management profession has played its part in the reform effort.

AIRMIC, which has two representatives on the Market Reform Group board, produced a contract certainty guide in the summer and carried out a road-show across the country, he said.

"The challenge is to keep it going. The large brokers have gone through a very significant behavior change, and our members are certainly very positive about the way they have reacted.

There is still a concern about what is happening outside of our membership, but overall we have seen that the market has learned how to make changes which are beneficial," said Mr. Gamble.