A new Terms of Business Agreement (TOBA) has been published by the International Underwriting Association for insurers and brokers to use in the London Market.
The agreement is intended to bring greater clarity to contracts and negotiations. It has been drafted by the IUA, together with the Lloyd’s Market Association and theLondon & International Insurance Brokers’ Association.
The 2011 Non Risk Transfer TOBA updates both the 2005 market model version and the 2009 IUA model version.
Chris Jones, Head of Market Services at the IUA, said: “The new model TOBA has been developed after much consultation between representatives from across different branches of our industry and I am sure it will now be welcomed by practitioners.
“In particular it incorporates a number of important new compliance provisions, including provision reference to the recently introduced Bribery Act and consideration of international sanctions. It also updates the agreement to reflect the new regulatory structure and key regulatory changes.
Mr Jones added: “The next step will be to produce a risk transfer version and we expect to cooperate with other market associations to commence work on this next year pending a review of client money rules by the Financial Services Authority.
“Updating the Risk Transfer TOBA is likely to focus on issues such as the assessment of credit risk, systems and controls for client money trust accounts, the scope of auditing rights and cancellation rights.
“None of these are new developments that necessarily require a new approach. But they may gain more significance in light of the FSA review.”
Guidance notes have been issued with the new Non Risk Transfer TOBA to members of the market associations. It is for each individual firm to decide whether they wish to use the model based on their own commercial relationships and corporate strategy. Contracting parties are free to negotiate different terms.