Timely renewals

There is no doubt that the advent of Financial Services Authority regulation has forced insurers to improve the timing of the delivery of renewal terms to brokers but, almost inevitably, there will be times when things go wrong.

Also, there will be cases where renewal is the subject of negotiation, perhaps following a change in the nature of the risk or where claims experience has deteriorated.

However, there is no excuse for leaving the release of terms or even review of the underwriting terms until the last minute. Again, the advent of regulation has been a benefit in encouraging timely review, thus avoiding the bad old days when clients could be presented with a 'take it or leave it' scenario with little time to consider other options or for the broker to approach other markets.

The FSA Insurance Conduct of Business Rules say that you must issue retail (personal lines) renewals to your clients 21 days before renewal date. Commercial renewals do not have a prescriptive timescale; the rules state that terms must be issued giving sufficient time for the insured to make an informed decision.

If you find that you are unable to send formal renewal terms ahead of the deadline, what you should do is write to the client, giving him advance warning that the policy falls due for renewal on a particular date, and that you are still negotiating renewal terms.

Alongside this, your client files should be clearly documented to show that you are alert to the problem and that you have been in regular contact with the insurer in an endeavour to obtain terms in a timely fashion.

Most brokers use some form of pre-renewal check list and, as with all aspects of good regulatory practice, the ability to prove what took place is paramount.

In such circumstances, the rule breach is committed by the insurer under ICOB 5.2.12 in which it is stated that the insurer must provide terms to the intermediary in good time to enable the intermediary to comply with the rules.

This question has prompted PB editor Richard Adams to investigate how widespread this problem actually is. If your firm has been affected by this issue, either in commercial or retail business, please e-mail richard.adams@incisivemedia.com. Further editorial on this would ensure your anonymity if you desire.