This month, the London market launched the Single Claims Agreement Party model (SCAP). This is a ground-breaking agreement which is the product of collaboration between the London and International Insurance Brokers Association (LIIBA), the Lloyd’s Market Association (LMA) and the International Underwriting Association (IUA). I had the privilege, along with my Ince & Co colleague Mehmet Achik-El, of drafting the Agreement and providing legal advice on the project to the LMA and IUA.
SCAP is an agreement between insurers which will allow a single London market underwriter, whether in the Lloyd’s or company market, to agree claims on behalf of all underwriters subscribing to a slip on the same terms, whether they are in the Lloyd’s market, the company market or overseas.
At present, SCAP is limited to claims up to a value of £250,000 to the slip. This latter qualification is important because it means that if there is a layered placement, a high layer leader could settle claims on behalf of subscribers to its slip as long as the claim on that slip did not exceed £250,000, even if the total ground up claim exceeded that amount.
SCAP does not cover disputed claims or claims which raise particular market issues. It will, however, be applicable to a high proportion of claims in the London market and its agreement is expected to increase significantly the efficiency of the London market’s claims handling. It is the latest step in a process of market modernisation which, in an increasingly competitive environment, is expected to enhance and maintain London’s position as a centre of international insurance.
Agreement to participate in SCAP is not mandatory but can be agreed on a placement by placement basis. It is expected, however, that the majority of the market will agree to participate.