Good Local Standard Clause
The good local standard clause requires that a local policy within an international programme provides at least the conditions, scope of cover and premium level that an insurer licensed in the country concerned would ordinarily quote a comparable local client.
- Clause type
- Condition
- Origin/Market
- International programme
- Favours
- Neutral
- Negotiability
- Negotiable
Purpose
Within an international programme, a group can rarely design each locally issued policy in detail, since different legal systems, language requirements and licensing procedures apply. The good local standard clause acts as a quality assurance: it obliges the programme leader to obtain, in every country, a policy that matches at least what local insurers would customarily offer comparable local clients — in terms of conditions, scope of cover and premium level.
Effect and limits
Good local standard is deliberately not an exact benchmark but a point of reference; it leaves room for interpretation, since what is “customary” varies by class and country, and local licensing rules may limit scope regardless. In particular, the clause does not guarantee alignment with the often broader conditions of the master policy; DIC/DIL mechanisms exist for that purpose.
Negotiation and practice
Programme leaders should specify good local standard requirements together with fronting partners and local networks, for example through reference wordings or minimum checklists per class, to avoid disputes over whether a specific local policy is adequate. For highly specialised risks, a manuscript local policy drafted by the programme leader may be a more suitable alternative to a purely good-local-standard policy.