New UK Insurance Act To Affect Commercial Insurance

Image New UK Insurance Act To Affect Commercial Insurance blogNon-consumer policyholders should be aware of upcoming changes to the Insurance Act, which come into force in August this year.

To ensure compliance there are several key facts that policyholders who purchase insurance for business, trade or professional purposes need to know. Our aim is to shed light on these facts in a simple and straightforward manner.

  1. The changes are to address the perceived imbalance in favour of insurers.
  2. The new law has flexible principles to meet the needs of small businesses right through to major corporations.
  3. The main change updates and replaces the existing ‘Duty of Disclosure’.
  4. Policyholders will be required to disclose, without misrepresentation every material circumstance known or that should be known to them.
  5. Policyholders will need to provide sufficient information to insurers to be able to make further enquiries where not all information is held by the applicant.
  6. Information that should reasonably be revealed by a search should be included, which includes information held by Boards of Directors (Executive and No-Executive)through to Senior Managers.
  7. All information needs to be provided in a clear and accessible manner, strictly no data dumping or cryptic submissions allowed.
  8. The Act introduces a new system of proportionate remedies to deal with a breach of fair presentation.
  9. Insurers will be able to refuse all claims but must pay back the premium if it can be proven they would not have entered into the contract. Or:
  10. Insurers will be able to treat the contract as if it had been entered into on different terms. Or:
  11. Insurers will be able to pay a proportionate part of a claim if it transpires the premiums should have been higher.
  12. The changes will also deal with:       Warranties, terms not relevant to the actual loss, fraudulent claims by Insureds, utmost good faith, and Amendments to the Third Parties Act 2010.
  13. The Insurance Act changes will come into effect on 12 August 2016 for new businesses.
  14. Existing business will see the change when policies come up for renewal on or after 12 August 2016, and for mid term alterations after this date. 

If you would like more information about what The Insurance Act changes mean to you and your business insurance, call us today on 01245 500433, we’ll be happy to answer your questions.

Sources:

http://www.nig.com

http://www.klgates.com

http://www.willis.co.uk