The new Insurance Act will come into force on the 12th August 2016. This Act is the first piece of legislation governing commercial insurance since the Marine Insurance Act 1906.
The objective of the Act is to modernise with a focus on transparency and certainty over the rules that govern contracts between commercial policy holder and insurers.
The Act covers any policy taken out on or after the 12th August 2016 or where there is a change to a policy taken out prior to this date, then the provisions of the Act will be applicable.
Who is impacted by these changes?
The Act will cover all non-consumer policies. A consumer is defined as any individual who is buying insurance wholly or mainly for purposes unrelated to their trade business or profession. A non-consumer is any other policy holder that does not fall within this definition.
In summary the following are the main changes:
- New responsibilities for policy holders to provide all relevant information for insurers. There is now a requirement to provide a fair representation of your risk and requirements to insurers, disclosing all material circumstances which would influence that insurer accepting the risk or the terms and conditions upon which they do so.
- In order to fulfil this requirement you are required to undertake a reasonable search amongst all relevant senior management to ensure that the information being provided is accurate.
- If the insurers are provided with a fair presentation then the onus is on them to ask questions for any additional information that they require. Under current legislation this is not a requirement on insurers.
- Failure to provide a fair presentation allows the insurers, under the Act, remedies concerning any claim which arises. The available remedies to insurers will very much depend upon whether or not the failure is deliberate/reckless or not. These remedies are outlined in the linked document.
- The application of warranties will only apply if material to the loss that is presented to the insurer. If they are not material to a loss then the insurers cannot rely on these not to pay a claim.
- Opting out – The insurers are availed with the opportunity to opt out of the Insurance Act. If they do so we will highlight this and outline the implications.
The objectives of the Act are to lead to greater transparency and lead to a reduction in the number of legal disputes.
Please follow the link below for a more detailed explanation of the Act and its implications for you as a policy holder. If you would like to discuss this further in any way please do not hesitate to contact us.
Click here for our document “The Insurance Act 2015 Explanation and Guidance.”