Amongst all the commercial contracts, insurance is the only one guided by an unwritten principle uberrimae fidei or utmost good faith that is considered paramount, superceding all written terms and conditions.

And yet an insurance agent, unfortunately, is one of the most distrusted professionals all over the world, and the insurance industry's reputation is way below others in the ranking of leading professions. More and more people have less faith in the promises being made in the insurance policy that it will pay when the customer needs it most when there is a loss!

In its annual underwriter survey, Lloyd's, the leading insurance market, put out in April, 2005, almost a third of those surveyed admitted that they thought the reputation of the industry was poor among consumers. More worrying still were the results of some Mori research carried out two years ago which put specialist insurance above only tobacco in a run-down of industries' reputations.

If this is the perception of insurance in the United Kingdom, which is professionally regulated through the Financial Services Authority (FSA), one can only imagine what impression the customers carry about insurance and insurers in the Middle East a region that practises insurance on laissez faire, with hardly any regulation!

One of the reasons for disputes in an insurance contract is the way the insurance contract is worded; more often than not, you need to read the policy document at least half a dozen times before you decipher what is covered and what is not covered. Time being at a high premium nowadays, most of the customers leave it to their insurance agents and brokers to take care of their best interests and secretly pray that they never may have to go to them for a claim.

Worse still are the numerous occasions when one concludes an insurance contract based on a quotation and the actual policy document containing the detailed terms and conditions arrives weeks or months after the commencement of the risk.

A large number of disputes in insurance arise due to such non-achievement of contract certainty at the time of commencement of insurance, as the customer if he is patient enough to read the policy detects some errors or omissions between the product that he negotiated and the one he actually received from the insurer.

It is to avoid the possible disputes arising out of such contract uncertainties that all the leading industry bodies put their weight behind a blueprint that will see at least 85 per cent of contracts written in the London insurance market achieve contract certainty "by the complete and final agreement of all terms between the insured and the insurers before inception". The blueprint submitted to the FSA on April 29, 2005, will oblige all the insurers and brokers doing business in the London market to offer the same level of contract certainty that is currently the norm in the banking and capital markets.

Interestingly, the concern about lack of transparency in insurance contracts is a point of concern across the whole of Europe too. The last week of April, 2005 witnessed the country members of the Paris-based Organisation for Economic Co-operation and Development (OECD) officially endorsing new guidelines for insurers and pension funds designed to improve investor and customer confidence in the insurance industry. The timely conclusion of insurance contracts and conveying the same to customers prior to commencement of risk is being advocated by OECD to improve integrity and transparency and demonstrate a commitment to better business practices.

Almost all the insurance companies in the region which look towards London and European markets for reinsurance support and inspiration can put this noble measure into practice so as to ensure that the insurance contracts are made as transparent as possible and the customer truly appreciates the policy that he has been bound to. One of the ways this can be implemented is to make it mandatory for an insurance policy to be duly executed by the signature of both insured and the insurer before the formal commencement of the risk. It may entail a little delay in the beginning, but is better than wasting time in avoidable dispute resolutions, subsequent to the policy conclusion.

The writer is the deputy general manager of Al Rajhi Company for Cooperative Insurance, Riyadh. The views expressed herein are his own and not necessarily subscribed to by his employers.