Insurance Act 2015 now enforced
The British Insurance Brokers’ Association (BIBA) has welcomed the Insurance Act 2015 which was recently implemented. The Act is designed to increase professionalism in the placing of commercial insurance and aims to provide fairer outcomes for customers but will also bring new considerations for brokers and businesses when arranging insurance.
The Act will affect every business insurance policy placed, renewed or amended after August 12, 2016, and is the biggest change to insurance law in more than 100 years. It will modernise insurance law and aims to make seeking payment from insurers simpler and fairer in the event of a claim.
The Act includes many positive developments, such as outlawing the ‘basis of the contract’ clauses which previously turned information provided by customers into warranties so that any change (even trivial or immaterial) could have led to termination of the contract.
BIBA also succeeded in lobbying for ‘terms not relevant to the actual loss’ to be outlawed meaning, for example, that if a policyholder has to comply with a warranty to turn on a burglar alarm but a claim is caused by a flood, then the insurer will accept the claim.
The Act will bring new requirements for customers, which could impact brokers, such as the ‘duty of fair presentation’ and the obligation of ‘reasonable search’.
Steve White, BIBA’s chief executive, said: “The industry has never experienced such a massive change in the legislation governing our practices, and we would like brokers and insurers to engage with each other in a way which adopts the Act’s requirements, to create a fair and transparent approach for all. We have provided a toolkit to help firms in our new implementation guide.”
The Insurance Act received Royal Assent by Parliament on February 12, 2015, and came into force on August 12, 2016. This represents the most significant reform of UK insurance law since the Marine Insurance Act of 1906. All contracts of insurance, reinsurance and retrocession made after 12th August 2016 (or variations to contracts which are made after 12th August 2016) will be governed by the Act.
The Act is the product of a process of law reform, which was instigated by the Law Commissions in 2006. The Act is intended materially to change the way in which insurance business is conducted, and is designed to modernise and clarify the law.
