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Insurance Act 2015 comes into force





SEP 2016






Registered office: 61 Friar Gate, Derby, Derbyshire, DE1 1DJ   T: 01332 202660

Adrian Mooy & Co is the trading name of Adrian Mooy & Co Ltd.  Registered in England No. 05770414

Registered to carry out audit work by the Association of Chartered Certified Accountants - 8011438

The 2015 Insurance Act (2015 Act) applies to all commercial contracts of insurance, and variations to existing contracts of insurance, from 12 August 2016 and introduces what the UK government has described as “the biggest reform to insurance contract law in more than a century”.

The Act is the result of a review by the Law Commission and Scottish Law Commission. It introduces substantial changes to the laws governing disclosure in non-consumer insurance contracts; warranties and other contractual terms; and insurers’ remedies for fraudulent claims.

Under the Act, business policyholders are required to make a fair and accurate presentation of risk before entering into a contract of insurance. The duty of fair presentation requires policyholders to disclose every matter which they know about, or ought to know about, that would influence the decision of an insurer of whether to insure the risk and on what terms.

For example, under the new Act:

  • If you don't comply with your duties, insurers now have a new range of "proportionate remedies", which could include reducing your claim payments significantly.
  • You must disclose information known by your senior management and by the individuals responsible for arranging your insurance.
  • You must carry out a reasonable search for information you ought to know, which could include making enquiries of people outside your organisation, such as external consultants.
  • You must disclose your information to insurers in a "reasonably clear and accessible" manner.

The Act also makes changes to the remedies for breach of the duty of pre-contractual disclosure.

Previously, an insurer was able to refuse all claims if the policyholder failed to properly disclose any risk before entering into the insurance contract. Instead, the Act has introduced a range of proportionate remedies.

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