The Insurance Act 2015
With effect from 12 August 2016 UK insurance law will never be the same again. Out goes the concept of “material disclosure”, a notion always looked upon with great suspicion by policyholders, and in comes its successor in the form of the principle to be forever known as “fair presentation”. And no longer the theoretical – though to be fair infrequently used – right of insurers to void insurance policies for breach of warranties or conditions where these terms were unrelated to a particular loss. Other changes also feature in the new law. In large measure the fundamental objective of the Act is to update the crude notion of “disclosure” originally introduced in the Marine Insurance Act 1906. Despite its title the 1906 Act governed all areas of UK general insurance. This process of updating followed eight years of consultations and review by the Law Commission which culminated in recommendations made to the government and which now find themselves enshrined in the new Act.
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The Act is “principles based” legislation but there should be no doubt that in adopting a more codified approach to insurance law, and in effect putting into law practices the industry has largely adopted in recent years, the Act imposes considerable duties on commercial buyers to ensure that they have demonstrable systems and practices in place that stand up to the test of good practice as envisaged by the law. In the words of the Act, the new duty of “fair presentation” requires a structured framework for disclosure that provides clear and accessible risk information, reflecting the knowledge of senior management, knowledge of the insurance team – by which term brokers are included, and information revealed by a “reasonable search”.
In view of the enormous importance of the Act we have prepared a guide for our clients, and for which we acknowledge content included in our publication and taken from “The Insurance Act 2015: An Implementation Guide from the British Insurance Brokers’ Association and specialist law firm MacTavish.