The Lloyd’s Market Association (LMA) and law firm Clyde & Co have jointly published new guidance on how insurance and reinsurance contracts may react in the event of a eurozone exit.
The guidance contains a checklist of points for Lloyd’s managing agents to consider relating to governing law, jurisdiction, location of the parties, contract denomination and other matters and some example clauses. The aim is to minimise risks in the event of an exit by encouraging parties (both policyholders and carriers) to include appropriate clauses at the outset in order to safeguard their intentions.
Kees van der Klugt, Director of Legal & Compliance at the LMA, said: “This piece of work is not a reaction to a particular item of news – the eurozone crisis continues to ebb and flow. It is there for underwriters, brokers and their wordings specialists to consider during the renewal season. The aim should be to include appropriate clauses pre-inception where, for example, contracts are denominated in euro, or a party or insured property is located in the eurozone.”
Nigel Brook, Partner of Clyde & Co, said: “This guidance is potentially relevant to all euro-denominated contracts into which an insurer enters. Since many arrangements, with inter-connecting reinsurance and service contracts, are potentially exposed, if a eurozone exit were to happen, it is important that the parties give thought to how the arrangements could be affected by an exit and how to achieve their intended position. Steps can be taken, as shown in the note, to reduce the risk of the parties’ intentions being frustrated.”
The guidance builds on previous publications on the subject by both Clyde & Co and the LMA. It can be downloaded from the home page of the LMA’s website at www.lmalloyds.com. Contacts for the market are Kees van der Klugt at the LMA and Nigel Brook at Clyde & Co.
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