The publication of the clause completes one of the association's big projects and time will tell the extent to which insurers agree to use the wording. Airmic hopes the clause will go a long way to halt the increased use of RoR by insurers and thus reduce some of the more severe claims problems experienced by its members.
The wording's key facet is an agreement for a 90-day cooling off period following any insured's claim or notification of circumstance before an insurer can issue a notice to reserve its rights. RoR enables insurers to reserve the right to refuse liability for a claim, or part of a claim, pending further enquiries. Although Airmic accepts it is a legitimate tool 'under some circumstances', its members report that it too often becomes the default position on large claims.
Airmic's new clause is similar in principle to the voluntary RoR Statement of Principles published by the association in 2008. But crucially it will be legally binding once inserted into an insurance contract, as opposed to the voluntary principles. The clause will protect both parties' rights during this 90-day period, enabling a free exchange of information, said Airmic, and this period can then be extended if required by mutual consent.
As with the disclosure clause, the various parties will be free to choose whether or not to use it and also free to change the wording of the RoR clause as part of their negotiations.
On the insurer side, Vinicio Cellerini, CEO of Zurich Global Corporate UK, commented on the new clause: "At Zurich we believe that open and constructive dialogue is critical to achieving a successful outcome in complex claims negotiations. Zurich supports Airmic's initiative in relation to Reservation of Rights (RoR). We believe it will encourage insurers and customers to engage in a constructive dialogue in relation to claims with a view to reaching consensus with each other, without recourse to legal process. We are confident that Airmic's initiative is a great step towards this objective."
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