Common use of Correspondents Clause in Contracts

Correspondents. 4.1 The provision describes the basic principle governing the approval of correspondents: i.e. each Bureau is free to establish – whilst acting within the limits of its national law ( e.g. prohibition of accrediting loss adjusters) – the conditions under which it grants, denies or withdraws approval to correspondents established in the country for which it is competent. It follows on from this principle that each Bureau shall produce a document accessible on request to all candidates for the position of correspondent established in its country. This is without prejudice to those conditions that are laid down by national law. (For reasons of transparency, it is recommended to display the document on the website of each Bureau.) This document describes all the qualifications required to perform this function. Nonetheless, since the Green Card System was established by the insurers, it is important for the Bureaux to respond to their wishes whilst abiding by their national law. The General Assembly of the Council of Bureaux (2009) has approved the use of the following three documents by Bureaux: 1) a model correspondents’ charter 2) a model handling and payment agreement and 3) rules for outsourcing. These documents can be adapted by the Bureaux to their own specific situation. The above documents approved by the General Assembly can be consulted on the Council of Bureaux extranet. In this regard it should be noted that each Bureau must abide by the principle of non-discrimination i.e. it cannot impose, without justification, on certain correspondents alone, conditions or charges (e.g. surety deposits) which would not be imposed on others. Furthermore, should a Bureau require the payment of certain amounts by correspondents, the same criterion of non-discrimination shall apply and the amounts charged shall be related to services actually provided on a non-profit making basis by the Bureau.

Correspondents. 4.1 The provision describes the basic principle governing the approval of correspondents: i.e. each Bureau is free f ree to establish – whilst acting within the limits of its national law ( e.g. prohibition of accrediting loss adjusters) – the conditions under which it grants, denies or withdraws approval to correspondents established in the country for which it is competent. It follows on from f rom this principle that each Bureau shall produce a document accessible on request to all candidates for the position of correspondent established in its country. This is without prejudice to those conditions that are laid down by national law. (For reasons of transparency, it is recommended to display the document on the website of each Bureau.) This document describes all the qualifications required to perform this function. Nonetheless, since the Green Card System was established by the insurers, it is important for the Bureaux to respond to their wishes whilst abiding by their national law. The General Assembly of the Council of Bureaux (2009) has approved the use of the following three documents by Bureaux: 1) a model correspondents’ charter 2) a model handling and payment agreement and 3) rules for outsourcing. These documents can be adapted by the Bureaux to their own specific situation. The above documents approved by the General Assembly can be consulted on the Council of Bureaux extranet. In this regard it should be noted that each Bureau must abide by the principle of non-discrimination i.e. it cannot impose, without justification, on certain correspondents alone, conditions or charges (e.g. surety deposits) which would not be imposed on others. Furthermore, should a Bureau require the payment of certain amounts by correspondents, the same criterion of non-discrimination shall apply and the amounts charged shall be related to services actually provided on a non-profit making basis by the Bureau. In the document laying down the conditions for correspondents, the Bureaux shall also address the matter of the withdrawal of the approval. This is a sensitive matter which should be approached with caution as any withdrawal might result in f inancial consequences for the entity concerned. Each Bureau shall accept responsibility for the consequences of any litigation ensuing from a withdrawal judged to be unfair. While each Bureau is f ree to unilaterally establish the conditions for granting or withdrawing such approval, the Internal Regulations also provide the Bureaux with an option to exceptionally agree upon conditions bilaterally or multilaterally when this is warranted by the case(s) concerned. In 2015, the CoB has adopted new Guidelines on Outsourcing in the Green Card system.27 The guidelines apply to outsourcing by Bureaux, insurers and correspondents. When setting the conditions of outsourcing for correspondents, the Bureaux also have to take into account these guidelines.