Airmic guide on RoR to be followed shortly by model clause

The guide was published with assistance from Herbert Smith LLP. The law firm simultaneously announced that a model clause to help deal with the issue of RoR, that it is also working on with Airmic, will be published in the next couple of months.The new guide explains why insurers reserve their rights, how they do that and how long they are entitled to reserve their rights for. Perhaps most importantly the guide gives practical suggestions to insurance and risk managers as to what they should do if they receive a RoR and, in particular, the questions they need to ask of insurers when that occurs.Airmic completed a survey of its membership in January 2012 on the subject of RoR that found that 33% of respondents had received at least one RoR letter within the previous two years.hide62% of those surveyed reported that they believe the RoR letter was issued unfairly and 57% indicated that the matter was not resolved to their satisfaction. On the basis of these results, Airmic concluded that its voluntary code on RoR agreed with insurers was not having the desired effect and said they would produce a guide for members and work on a clause for insertion into insurance policy documentation. “In January 2012 Airmic conducted a survey of its members and they reported they were experiencing reservation of rights from insurers too often and in circumstances they found unsatisfactory. Accordingly John Hurrell and the Airmic team asked us to work with them to produce a guide for members on how to deal with reservation of rights,” said Alex Oddy, Partner at Herbert Smith.The guide explains that a RoR letter does not act to decline a claim but to protect an insurer’s rights. By putting in place a RoR, an insurer is then able to liaise with an insured and explore whether the claim is covered under the policy. This may also provide an insured with the opportunity to discuss their concerns with the insurer.According to the guide, a RoR may indicate that the insurer has concerns in relation to the availability of a defence to the claim. It should put the insured on notice of such concerns and the insured should consider whether further assistance is required with the claim at this early stage. Although the insured does not have to respond they may wish to ensure the RoR has been recorded correctly, says the guide. Where possible, the insured should respond to the insurer about any issues and reasons it has raised underlying the RoR, it adds. As the claim progresses, the insured should regularly seek an update of the insurer’s position and where practical, press for removal of the RoR, advises the guide. To access the guide’s full recommendation please go to http://www.airmic.com/research/guides/reservation-rights.The next step for Airmic is the publication of the clause that policyholders may wish to consider including in their insurance policies.“That clause seeks to formalise the engagement with insurers so that explanation by insurers as to why they have imposed a Reservation of Rights is undertaken clearly and in a timely fashion so that a policy holder understands exactly those reasons and knows whether its claims are going to be covered or whether a reservation, or indeed a declinature of the claim, is to follow. We are working on that clause at the moment and hope to have something published in the next month or two,” said Mr Oddy.

Airmic guide on RoR to be followed shortly by model clause

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