I was very interested to read recently that the commercial insurance industry in Bermuda has adopted a contract certainty code of practice that requires practitioners to provide clients with certainty in the terms and conditions of their coverage at the time that a line is written.
This, of course, makes perfect sense to us in London. Contract certainty is an accepted business phenomenon within London and is now part of the regulated firm’s relationship with the FSA. I am sure that Bermuda's adoption of the code is not without FSA influence. They have long campaigned for other regulators to seriously consider the adoption of contract certainty standards. They must also therefore be pleased that Bermuda has identified 1 January 2009 as the start date for a contract certain regime.
The London and Bermudian markets are of course symbiotic in many ways and it is not a great surprise that from a commercial perspective Bermuda has now decided to replicate London. Many risks will be co-insured by both markets and this adoption of the code is probably only formalising what happens in many instances now.
London insurers also buy reinsurance from Bermuda therefore they will be pleased that their own renewal terms will be certain at inception. This all helps to allow insurers and reinsurers to manage their operational and financial risk better leading to a more disciplined organisation. This is of course ultimately in the best interests of clients who choose to seek protection from both London and Bermudian markets.
