Navigating the Insurance Act 2015
17 October 2016
The Insurance Act 2015 came into force on 12 August this year. The Act reforms insurance law, which has been embedded in our legal system for around a century and is an important piece of legislation for all of us involved in the Consumer Sector. The law in respect of material non-disclosure and misrepresentation has been seen for some years to be heavily weighted in favour of insurers and being unfair to insureds. The Act seeks to redress this issue.
The Act replaces the duty to disclose material facts with a new duty to make a fair presentation of the risk and provides new remedies in the event of a breach of this duty. These remedies are proportionate and are generally speaking, more favourable to insureds than the position as was, prior to the coming into force of the Act. Further, insurers’ ability to rely on certain terms such as warranties and conditions precedent to decline paying claims, is now limited to circumstances were a loss is connected to a breach of warranty or condition precedent.
The insurance programmes of organisations in the Consumer Sector are typically highly complex, multi-jurisdictional and can be subject to negotiation with insurers and these factors all make the Act especially relevant. In broad terms the Act is favourable to insureds although, nevertheless, businesses now need to consider whether they should be contracting out of parts of the Act. Businesses which are subject to the new duty to make a fair presentation will need to review and update processes to ensure compliance and agree with insurers the various definitions. We recommend that this review is undertaken as soon as possible before renewal. It is essential that insureds understand the workings of the Insurance Act 2015 and how the law has changed, so that insureds can protect their position as best they can in respect of disclosure to insurers, thereby minimising the risk of policy avoidance.
Our guide to navigating the Insurance Act 2015 is available below.
This is a general guide and there will be issues which are unique to your business and sector, so for more information please contact:
+44 20 7919 4583
+44 161 831 8165