| Link(s): | Insights LMA launches new clause to strengthen sanctions compliance in (re)insurance contracts |
Context
The has published a refreshed model wording for UK Consumer Personal Accident lines, and a new clause to strengthen sanctions compliance in (re)insurance contracts.
Key points to note and next actions
- In an update to the UK Consumer Personal Accident Group Policy wording (“KA Form”), this newly released model wording adheres to the LMA’s UK Consumer Wordings Guidance.
- Presented in a visually appealing format, the refreshed wording uses plain language, with no sentence exceeding 25 words. It is structured to promote comprehension, providing tips and signposts for customers throughout the document.
- The new model clause, LMA5670 – General Sanctions Financial Crime Documentation Clause, is designed to enhance the ability of (re)insurers and brokers to comply with evolving sanctions and financial crime regulations.
- In response to the increasing complexity of sanctions legislation and the speed with which it is introduced, the new clause introduces a contractual obligation for (re)insureds to provide documentation upon reasonable request, particularly to deal with situations where such obligations arise mid-contract.
- The clause is intended to provide insurers and brokers with an added layer of protection and to “future-proof” their contracts by:
- Giving contractual rights to access documentation from their insureds as necessary to confirm no exposure to sanctions or financial crime regulations;
- Minimising the burden on (re)insureds by limiting such requests to information that is reasonably required, accessible through best efforts and not outside their control; and
- Automatically discharging the contract in cases where the insured has not cooperated appropriately – aligning with recent requirements from the UK authorities