No-one wants to be left hanging in the air, and aviation insurers are taking steps to ensure there are no distress calls after Britain’s departure from the European Union.
A new model contract continuation clause, which aims to make sure cover is not disrupted post-Brexit, has been published by the Aviation Insurance Clauses Group (AICG). Chris Jones, director of legal and market services at the International Underwriting Association, said the goal is to provide clients with additional certainty.
“Without any new trade agreement or business continuity arrangement, it is possible that some insurers may not be in a position to continue providing cover or pay claims on cross-border contracts,” Jones was quoted as saying in a report by
CIR Magazine.
Noting how insurance policies last one to two years or longer, the report said insurers want to minimise cover disruption ahead of the UK’s exit less than two years from now.
Meanwhile, Jones explained that while the new clause has been drafted with aviation policies in mind, the relatively generic wording could be adapted for use in other business classes if necessary.
“The basic principle underpinning the new clause is simple: to allow for a transfer of an insurer or reinsurer’s participation in the contract. However, this is subject to specific criteria, applying only where cover cannot be provided because of the UK leaving the EU,” he said. That means the clause cannot apply in other circumstances.
Jones also pointed out that multi-year policies may potentially extend beyond the Brexit deadline and believes an effective policy response looks like a prudent course of action.
The AICG was established in 2005 by the International Underwriting Association of London and the Lloyd’s Market Association.
Related stories:
AGCS names its new global head of aviation
Willis Towers Watson and AIG join up to launch product
