IUA Circular 059/16

Freedom of Services and General Liability Insurance

Date: 8 June 2016

Interest Groups: IUA member contacts, all underwriting and claims interests

Subject: Publication of a report by the IUA Liability Underwriters' Group on insuring general liability risks on a Freedom of Services basis.

IUA Contact: Chris Jones, Director of Market Services

Following a lengthy period of review and drafting, the IUA’s Liability Underwriters’ Group (LUG) has finalised a report on insuring general liability risks on a Freedom of Services basis. This is accessible via the hyperlink above and will also be available from the IUA website.

Writing FOS risks can be a lengthy, complex process but offers potentially attractive benefits for all parties to the contract. With a growing appreciation and scrutiny of such risks LUG felt it was a suitable time to more formally revisit this area of insurance practice and law with a view to providing an introductory guide for general liability practitioners – though we think the paper will be of wider interest to other classes of business practitioners.
Entitled “Freedom of Services and General Liability Insurance – an introductory guide and practical underwriting, claims and compliance considerations”, the guidance has been developed via a sub-group of LUG with advice taken from Kennedys LLP. It is not intended to be a comprehensive legal analysis of FOS risks, more a consideration of the practical issues underwriters need to consider when considering the FOS option.

The report is broken down as follows:
Introduction – Freedom of Services (FOS) in the Insurance Context

Market Analysis:
What is and what is not Freedom of Services
Pros and Cons of FOS
The Lloyd’s market
FOS for liability policies and other classes of business
Legal and compliance considerations

Issues for Practitioners in Providing Insurance on an FOS basis:
Formation and drafting of insurance contracts
Calculation of premium payment and taxation
Claims and claims payments in an FOS setting

Market Experience of Providing General Liability cover on a FOS basis:
How FOS policies are put together and wording trends – review of FOS wordings
Compulsory insurance cover
Coinsurance and excess of loss



Writing FOS risks – Insurer best practice checklist
In-depth study on FOS risks and insurance scenarios:
- Study 1: Excess / Residual / Contingent Employers’ Liability international programmes
- Study 2: Excess owned motor liability under FOS master liability insurance policy
- Case Study – writing FOS risks (combined General Liability and Motor Liability scenario)
The EU, EEA, EFTA and FOS in Micro States
EEA Liability Pools
A Selection of FOS Clauses
FOS – Introductory Legal Comments

Any questions with regard to this circular or the report itself can be directed to myself via the contact details above.