The Insurance Act 2015, will launch on the 12th August 2016. The act is set to significantly impact your disclosure obligations when you make any changes, renew or take out insurance policies for your business subject to the laws of England and Wales, Scotland and Northern Ireland. The act will see some of the most significant modifications to UK insurance contract law in over 100 years.
What are the key aspects?
• A new duty of fair representation of the risk
You will need to take into account that there is a new duty to carry out a "reasonable search" for any information that you ought to know and ensure that this is disclosed to your insures. This process requires you to make sure that you have inquired with the relevant members of your organisation and external third parties (such as your broker or subsidiaries) to gather the relevant information. This "reasonable search" will depend on how complex your organisation is and the company size.
• More Questions from Insurers during the underwriting process
How you present and disclose your company information and data during the underwriting process will be key to ensuring that the process runs smoothly. You will need to work closely with your broker and insurers to decide how best to present the information that they require in the "reasonably clear and accessible" manner. Once the act has been launched, it will no longer be acceptable for presentations to be brief or unstructured. All presentations will have to be clear, concise and structured so that all key information can be accessed easily. All data will need to be described in detail and outlined for an easy review during the underwriting process, files with excess data that are not necessarily relevant to the task will not be accepted.
• Different remedies now available for non-disclosure or material misrepresentation
The UK association for risk and insurance management professionals (Airmic) have produced an endorsement within the Insurance Act that will incorporate new proportionate remedies in the event of a non-disclosure or material misrepresentation scenario. For example, if there has been a breach to the current disclosure the endorsement will be applicable. It is worth taking note, that your current policy may already give you better protection against any non-disclosure or material misrepresentation then this clause would, so it is vital that you speak with your broker to decide what is best.