“Insurers need to focus on the legacy issues around loss funds,” says insurance services firm Ambant Limited.
Ambant – which has recovered $29 million for six Lloyd's Syndicate clients over 10 years of account – has revealed how much historic loss funds there are: more than £200 million.
Loss funds, according to Ambant, are monies held in trust by a third-party administrator (TPA) or broker on behalf of the capacity provider and which are used to facilitate the payments of claims at a set agreed value level.
As for legacy or historic loss funds, Ambant director Andy Collery described them as those which are three years or older, “given that Lloyd’s operates a three-year accounting system.”
Ambant said there remains “a great deal of apathy” when it comes to legacy loss funds – some have simply written the fund off, or do not believe it is worth the time and effort to carry out an investigation.
“There is little doubt that the various London market and Lloyd’s initiatives around the movement and analysis of data has allowed the market to ensure they have a far better understanding of claims payments,” said Collery.
“However, it has only been in the past three years that the market has been given the ability to code the payment of loss funds, and therefore better able to be track amounts and returns,” he continued.
Collery said “focus is the core mantra” for the market around historic loss funds. “It must look to the issue of legacy loss funds as in effect this potentially could free money waiting to be returned.”
The firm believes failing to focus on legacy funds would leave underwriters and claims departments in danger of missing out on recoverable cash.
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