The impact of UK Single Claims Agreement Party on following insurers

Out-Law Legal Update | 11 Jul 2018 | 3:50 pm | 4 min. read

London's main broking and underwriting communities collaborated to produce a framework that would handle low value, non-complex claims involving multiple insurers more quickly and cheaply. This Single Claims Agreement Party (SCAP) has been in operation since 1 February. SCAP means that one insurer takes the lead on claims management but the system contains protections for the other insurers, the followers, giving them access to information and to a process by which they can challenge the lead insurer's approach.

When SCAP is integrated into a multiple insurer risk contract the lead insurer has sole authority for claims-handling and determination. Follower insurers will have significantly less involvement in claims management however they must be kept up to date with basic claim information and have the right to request further information if necessary. Robust mechanisms for raising claims concerns and issuing dispute proceedings should also provide reassurance to follower insurers that have any concerns about the significant delegation of rights under the arrangement.

SCAP can apply to claims of up to £250,000.

SCAP is the result of collaboration between the main broking and underwriting communities in the London Insurance Market - International Underwriting Association of London (IUA), Lloyd’s of London, the Lloyd’s Market Association (LMA) and the London & International Insurance Brokers’ Association (LIIBA). Although a single claims arrangement already exists within the Lloyd's market, it is not yet typical in the company market and it is expected that as many as 80% of claims in the London Market could be within scope for SCAP, radically reducing response times and costs.

Contractual Agreement

The broker and insurers wishing to adopt the SCAP arrangement must agree this, on a risk-by-risk basis, at the time of placement of the contract and write in the relevant Model Clause wording (LMA9150). All insurers must be participating in the risk on the same terms, other than those relating to the premium and brokerage. Sole authority for claims-handling responsibility for in-scope claims falls to the leading insurer (slip lead), which must be a UK-authorised insurer or a member of Lloyd's. The SCAP arrangement only applies when incorporated into new placements or renewals and not to existing placements or claims.

When is an claim in scope?

Claims must have a value of less than £250,000 to be in scope for SCAP. Financial value is calculated after the application of any deductibles and includes any of the insured's expenses or other recoverable amounts but not connected insurer costs. Where they apply, exchange rates will be fixed at the outset and claims will not exit the SCAP arrangement for reasons of currency fluctuation alone.

A number of non-financial considerations must also be taken into account by the slip lead, including issues of fraud or avoidance; allegations of regulatory breach; actionable allegations of improper claims handling and claims considered to be controversial, complex or the subject of any form of dispute resolution proceedings. Essentially, it is only low-value, non-complex claims that fall within scope of SCAP. Issues of complexity must also be monitored during the life of the claim such that if an issue arises down the line, the claim must be reassigned out of SCAP and back to normal claims-handling processes.

Removal from day-to-day involvement

SCAP provides the slip lead with sole authority to:

  • assess and decide whether a claim is in-scope;
  • determine in-scope claims;
  • delegate its power of determination to another entity,
  • appoint and instruct independent, external professional advisers and be the sole recipient of their reports and correspondence – although fees for these advisors are payable by all insurers.

Supporting documentation for the claim must be properly recorded and retained for at least seven years following closure of that claim.


Followers have a couple of in-built protections under the SCAP arrangement. Firstly, the broker is obliged to provide bare minimum information about any new SCAP claim including when it becomes assigned, recommended reserves or changed reserves, the final determination amount as well notice of commencement of any dispute resolution proceedings. Followers can request further information at any stage.

Secondly, the slip lead has a number of duties when determining an in-scope claim including:

  • to act in good faith and to exercise reasonable care;
  • to act in the best interest of those on whose behalf it acts;
  • to comply with all laws, sanctions, regimes, regulations and related guidance that may affect determination of the claim, and
  • to notify followers in relation to any dispute resolution proceedings commenced against them. Even in the event of delegation, the slip lead remains responsible for all acts and omissions.

Robust mechanism for raising concerns

Followers have considerable power to interrupt the claims-handling process for in-scope claims where they become concerned about any aspect of that process. Having notified the slip lead of their concern, both parties must use their best endeavours to resolve the concern. However, if the disagreement remains after 28 days the relevant claim will exit the SCAP arrangement and be considered under the usual basis of claims agreement which applies to all other London Market claims.

Dispute resolution procedure mechanism with capped liability

Followers must commence dispute resolution proceedings against the slip lead in relation to any disagreement over the claim determination. It is also open to followers to commence proceedings for any alleged breach of duty of its obligations under the SCAP arrangement.

The Dispute Resolution mechanism has a number of clearly defined steps including:

  • an initial period of 21 days for representatives of the follower and slip lead to try to resolve the dispute;
  • if unsuccessful, a further period of 28 days for senior management from each of the two parties to try to resolve the dispute;
  • if unsuccessful, the parties must enter mediation failing which it must be settled via arbitration under fast track arbitration rules.

The total liability of the slip lead, whether in contract, tort or breach of statutory duty, is limited to £500,000 for any one in-scope claim and liability for loss of profits, loss of business, loss of use or any other indirect, special or consequential damages is not permitted.

Elaine Quinn is an insurance expert at Pinsent Masons, the law firm behind