Big statutory changes for insurers and brokers
The rules affecting how insurers and brokers deal with their customers are about to change after 110 years of (doubtful) practices. Instead of being able to avoid claims on the grounds of non disclosure of immaterial and trivial information, insurers will now have to take a much more balanced and reasonable approach.
The Insurance Bill was passed unanimously in the House of Commons last week and now awaits Royal Assent to become law. The Insurance Act will replace parts of the Marine Insurance Act of 1906 which underpins much English insurance law. The main changes centre around duties of disclosure, remedies for fraudulent claims, and warranties, including the reinstatement of a clause restricting insurers’ ability to rely on breach of warranties.
The change is positive and long overdue, as it will hopefully redress the balance between insurer and insured in the current regime, which is viewed to be heavily in favour of insurers. Welcoming the approval of the fundamental reform, John Hurrell, CEO of Airmic, the body that represents UK corporate insurance buyers and risk managers, said:
"So far the UK insurance market has been positive and responsive to the proposed changes…we shall certainly be encouraging our members to open a dialogue with their brokers and insurers to secure the important benefits of the new legal framework as soon as possible."
Insurers, brokers, underwriters and insureds alike, therefore, need to consider what will now be expected of them and whilst the reforms will provide the market with clarification of duties and obligations, you will need to ensure that you are looking carefully at your processes and procedures to ensure that you are approaching insurance correctly and in line with the reforms.
What this means to you
For brokers - the ability to assure your customers that their claims must now be treated fairly by insurers and not avoided or delayed by spurious arguments.
For insurers - the ability to rely only on material issues when challenging claims, and therefore the need to assess risk more effectively.
For customers - the comfort that if an immaterial or trivial piece of information is omitted in an application form, it won’t necessarily be fatal if a claim arises
For more information or to start a conversation on how we can help you, please contact Nicola Billen, Associate, Dispute Resolution.
Published: 13 Feb 2015