This Insurance Act amendment is a long overdue change governing England, Wales, Scotland and Northern Ireland and complements the Marine Insurance Act of 1906. Affecting commercial insurance and reinsurance, the Act governs polices placed, amended or renewed after 12th August 2016 and updates the Marine Insurance Act 1906 to better suit current commercial practice.
The Act tries to balance previously unfair elements between the insurer and the policyholder by making significant changes to rights in several areas:
1. The duty of disclosure
2. Remedies available to the insurer in the event of material non-disclosure or misrepresentation
3. Interpretation of warranties and conditions not relevant to the loss
4. The removal of Basis of Contract clauses.
Insurance practitioners must have a better understanding the duty of fair presentation. The primary focus of Insurers is to ensure that policy wordings comply with the provisions of the Act. Insurers and brokers are beginning to release guidance on how the process of the disclosure will take place.
Most policyholders or their brokers have received no information on the duty of fair presentation. Loss Assessors recommend that policyholders are proactive in taking control of the review of their insurance renewal processes from the outset and that they do not wait for their brokers or insurers to release information. There are two briefings:
1. The Insurance Act 2015: what members need to know
2. The Insurance Act 2015: Taking Advantage of the Insurance Act’s benefits
Both break down the duty of fair presentation and suggests how policyholders can review their own position if confronted with a claim under their policy after the date of inception. In all cases, especially commercial claims, a specialist insurance claims management company or loss assessor should be engaged to assist with the claim. Fire damage and flood damage are common examples of a typical claim.
These can be complicated and require a thorough understanding of the policy and the resulting damage. It is of concern that Insurers will rewrite their terms of business and contract to skirt around these areas and put the ball firmly back in the court of an insurer in the event of a claim.