In a market bulletin released on 31 March 2011, Lloyd's set out its revised Claims Management Principles and Minimum Standards (click here for a copy of the bulletin). The revision is part of Lloyd's Claims Transformation Project in order to "facilitate and increase the competitive advantage from the efficient handling of claims on their merits".
As part of the revision, the existing Minimum Standards, first issued in 2005, are replaced with new Minimum Standards that will also be compatible with Solvency II requirements. They are applicable to all managing agents in respect of their management of inwards claims to syndicates authorised to conduct business at Lloyd's. The new Minimum Standards come into effect on 1 April, although Lloyd's has announced a nine month transition period to assess performance and address any gaps in the Minimum Standards.
The Minimum Standards sets forth general claims reporting and handling guidelines for managing agents addressing, among others, the following topics:
- Managing agents should have appropriate claims resources, skills and management controls in each class of business written or proposed to be written.
- Claims should be adjusted and processed in an accurate and professional manner and properly managed to conclusion, having regard to the circumstances of the claim.
- The handling of a claim should be appropriately documented and information relevant to the management of the claim retained for an appropriate period.
- Claim reserving should be undertaken with the goal of a consistent, timely and accurate result and should take into account both possible costs and indemnity potential.
- Disciplined procurement and pro-active management procedures should be employed in the selection and use of third parties.
- Planning, measurement and review of claims management performance and capabilities should be appropriate and regular.
- For subscription business there should be an effective claims agreement process to protect the interests of following Lloyd’s syndicates (followers), supported by co-operation of claims agreement parties.
- For subscription business there should be an effective claims agreement process to protect the interests of followers, supported by co-operation of claims agreement parties.