On 12th February 2015, the Insurance Act 2015 received Royal Assent and marked the greatest change to UK insurance law in over 100 years.
The considerable impact of this profound transformation is, in part, due to these five key changes, which come into force in August 2016.
- Utmost good faith/non-disclosure: Under the act, you are bound to hand over any necessary information to insurers in order to make a ‘fair’ presentation of your risk. When volunteering this information, you must carry out a ‘reasonable search’ for information, ensuring that you are presenting an accurate portrait of your company’s risk in a clear, accessible manner.
- Remedies: If your company made a deliberate or reckless misrepresentation or non-disclosure, your insurer can void the policy and keep the premium.
- Warranties and other policy terms: All warranties that your company has will become ‘suspensive conditions’. This means that your company’s insurer will not be liable for loss during a period of non-compliance, but can become liable after the breach has been remedied.
- Fraudulent claims: If your company is found to have made a fraudulent claim, your insurer can terminate your contract and keep the premium. In addition, your insurer is not liable to pay a fraudulent claim and can recover any sums already paid related to that claim.
- Contracting out: Your company’s insurer will be able to contract out of the act and introduce more stringent terms, as long as the changes are brought to the attention of all stakeholders in a way that satisfies the act’s transparency requirements.
Although you still have one year before the act comes into effect, you should begin preparations now. With help from Bollington Insurance Brokers, ask yourself whether there is anything special or unusual about your business’s risk that you should identify early on to your insurer. Discuss how you can document that your company undertook a ‘reasonable search’ for information to prove your compliance. Also, compile a list of any employees who needed to be consulted when conducting the reasonable search.
For more information on the Insurance Act 2015, visit bit.ly/insurance-act-uk