RPC advises International Underwriting Association on ‘financial loss’ guidance
Date:05 September 2012
City law firm RPC (Reynolds Porter Chamberlain LLP) acted as legal adviser to the International Underwriting Association (IUA) in the production of its detailed new guidance report for UK insurers on “financial loss”.
The report, ‘Financial Loss: What is it and when is it covered?’, is designed to address the lack of common understanding and agreement amongst the insurance industry around the definition and coverage of ‘financial loss’.
Financial loss coverage is typically offered by insurers as an extension to traditional liability policies, but can easily be confused with other concepts, including:
- Economic loss
- Pure economic loss
- Consequential loss
Stuart White, Partner at RPC who worked closely with the IUA on the report, comments: “Financial loss is a term used very frequently by insurers, but what it actually means will typically depend on how it is defined in the different wordings used by the insurer in question.”
“UK policies do not cover liability for financial loss as standard but insurers often offer it as an optional extension, though the scope of such extensions can vary widely.”
“It is obviously important for insurers to understand liability for financial loss and how much or how little cover a policy extension may offer. A broker must also understand the business of his client and think about the exposures that arise from that.”
Chris Jones, Director of Market Services at the IUA, said: “Financial loss extensions are becoming an increasingly common feature of UK general liability wordings, but the phrase has no technical legal meaning. It can also be easily mixed up with other expressions used by insurers and lawyers.
“We wanted to explain the subject, so that underwriters and brokers have a clearer understanding of the law and what the implications are of giving this extension of cover.”
The comprehensive guide was produced by the Liability Underwriters Group, part of the IUA.
The guide can be found here.
Stuart White, Partner
Reynolds Porter Chamberlain LLP
Tel: +44 (0) 20 3060 6557
Nick Mattison or Louis Auty
Mattison Public Relations
Tel: +44(0)20 7645 3636