LONDON (Reuters) - Britain's financial watchdog said on Tuesday it expects the general insurance industry to have succeeded in solving issues around contract certainty by its year-end deadline, but said it was too soon to call a victory.
In December 2004, the Financial Services Authority (FSA) gave the market two years to ensure that insurance contract terms are agreed at the time that policies commence -- effectively ending a practice of "deal now, detail later".
The practice had produced significant litigation and, in some cases, unexpected losses for insurance companies.
For example, a number of London market insurers became involved in a multi-billion dollar legal battle over insurance for the World Trade Center in New York.
But in March this year, the FSA shelved plans to implement legislation, saying the industry was addressing the issue.
"We've said that, by the end of this year, 85 percent of contracts should be in place by the time the coverage begins," Thomas Huertas, director of wholesale firms at the Financial Services Authority, said.
"We laid down this challenge to the market place and the market has responded very effectively, putting in place changes to the way they do business. There is every indication that the market will meet this challenge."
Lloyd's of London Chief Executive Richard Ward said last month the insurance market was on track to meet its target, saying more than 80 percent of contracts were already achieving certainty.
But Huertas said the FSA would not come to any conclusions before the year-end deadline and until it had seen final data. Continued...
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