Category: Claims handling · Reviewed by Al Jabbar, Broker · Specialist Risks · Last reviewed 2026-06-11
A conduct-of-claims service level agreement (SLA) is an internal or contractual commitment by an insurer (or its delegated TPA) to specified standards of claims-handling timeliness, accuracy and communication — typically expressed as defined KPIs with target percentages.
Claims SLAs are the operational expression of the regulatory and contractual obligations on the insurer. Where ICOBS 8 requires “prompt” and “fair” handling, the SLA specifies what prompt and fair mean in practice: acknowledgement within X days, first substantive contact within Y days, decision within Z days, payment within W days.
SLAs exist at two levels. Internal SLAs govern the insurer’s own operations and are tracked in management information dashboards. Contractual SLAs govern the relationship between the insurer and its delegated TPAs, MGA partners or brokers operating with claims authority.
The supporting framework includes:
For delegated authority business, Lloyd’s requires written claims management agreements specifying SLAs as part of the binder or coverholder agreement.
A typical insurer’s claims SLA framework covers:
Each commitment has a target attainment percentage (typically 95-98%). Performance is measured and reported in monthly management information. Misses are reviewed and corrected.
For TPA arrangements, the contractual SLA is typically more granular and includes financial consequences (service credits) for failure. A TPA that misses defined SLAs by a stated margin may have a percentage of its handling fees withheld.
For policyholders, the SLA may be reflected in the policy schedule or in service literature. Where it is, the policyholder may have direct enforcement rights. Where it is not, the SLA operates as an internal benchmark.
The relationship between SLAs and the section 13A reasonable-time test is important. Meeting internal SLAs is not a complete defence to a section 13A claim (the SLAs may be too lax), but persistently breaching internal SLAs is significant evidence of unreasonable conduct.
For supervisory purposes, the FCA reviews SLA performance during thematic reviews of claims handling. Persistent breaches across a portfolio attract supervisory engagement.
“Operational SLAs” — internal performance targets without external enforceability.
“Contractual SLAs” — binding commitments in TOBAs or service agreements, with financial or operational consequences for breach.
“Customer-facing SLAs” — communicated to policyholders as commitments, with potential direct enforcement.
“Major loss SLAs” — accelerated SLAs for material losses requiring rapid response.
“Phase SLAs” — SLAs broken down by phase of the claim lifecycle, with separate targets for each.
A motor insurer’s claims SLA framework:
Performance Q2 2026: FNOL acknowledgement 97.2% within 4 hours (above target). Engineer instruction 96.1% within 2 days (above target). Liability decision 87.4% within 21 days (slightly below target, attributable to a backlog from Storm Babet claims in Q1). Settlement payment 96.8% within 5 days (above target). Customer satisfaction 83% (below target, driven by complaints about communication frequency).
The Q2 review identifies actions: additional resourcing on liability decisions for catastrophe-related claims; investment in customer-facing communications templates; further training for handlers on update cadence. Q3 targets are recalibrated.
By Matt Bartlett, Director, on 2026-06-11. Next review: 2026-12-11.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-11. Apex Insurance Brokers Limited, FCA FRN 724952, Companies House 07014570. Not regulated advice — consult your broker on your specific position.
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