The Loan Market Association (LMA) has released a new Model Credit Risk Insurance Policy (CRI).
According to the association, this was done in conjunction with Lloyd’s Market Association and the International Underwriting Association (IUA). He said the CRI policy is written with the aim of insuring the credit risk of a single borrower arising from a loan agreement and taking into account the requirements of the CRR for unfunded credit protection.
Amelia Slocombe, Managing Director and Head of LMA’s Legal Department, said: “Given our general recognition in the market as a provider of loan documentation templates, we felt we were well placed to help with this. project. We believe this document will be extremely beneficial for new entrants to banking in particular, and will give well-deserved recognition to a product that is rapidly becoming a very valuable risk mitigation tool for lenders.
She added: “The creation of this document is further evidence of the LMA’s continued commitment to fostering market growth and liquidity across the EMEA region. This is the first time we have produced an insurance policy document, it is a very welcome addition to our existing suite of documents and one which we hope to continue to refine over time alongside all members of our working group who have greatly contributed to this process.
The LMA said on behalf of everyone involved that the CRI product is sophisticated and that a model document cannot replace expert advice, which is needed to ensure it is suitable for the particular needs of each client and the nature of the risk to be insured.
He also said the policies are not intended to supersede or supersede terms already negotiated between and agreed to by specific insured lenders and their insurers.
Arabella Ramage, Legal Director of Lloyd’s Market Association, said: “Insurers at Lloyd’s and the wider London market have seized the growing opportunity to support banking customers with individual credit insurance cover. To support our members, the insurers, we have brought together experts from across the market to establish a baseline for the cover we are able to offer. This is all the more valuable as the blocks of risk are often shared between insurers; it allows everyone to approach these risks from an agreed starting point.
She added: “We anticipate that the CRI policy will encourage greater capacity (or supply) of insurance in the market. That said, the CRI policy is not a prescribed form that must be used. We have delivered it as a starting point for each policy which, in the best tradition of Lloyd’s and the London market, can be personalized for each insurance case. These types of products never stop, so we expect them to be adapted and improved and look forward to working with the other associations on an ongoing basis to refine the product. »