The Insurance Act 2015

You may already be aware of the Insurance Act 2015, which comes into effect this August, bringing with it the biggest change in insurance contract law for more than 100 years. But do you understand what it means for you?

What is the Insurance Act 2015?

• A new legal framework affecting every insurance policy placed, renewed or amended after 12th August 2016.
• It is designed to bring insurance law up to date and aims to make recovery easier and fairer in the event of a claim.
• These benefits are dependent on you making a “fair presentation of your risk”

What are the key changes for you?

• The obligation to carry out a reasonable search for risk information.
• The requirement for clear & accessible presentation of this information.

Reasonable search

This is a new obligation and will vary according to what is reasonable in the context of your organisation, but essentially requires you to carry out a reasonable search for information you ought to know. This requires you to involve your senior management team in the process and you may need to make enquiries of third parties such as external consultants or contractors.

For example if you are a small manufacturing business you may need to liaise with your Production Manager or Financial Director to give a full representation of your production processes.

Clear & accessible presentation of risk information.

This ensures that information is provided to insurers in a clear and accessible manner, data-dumping of large amounts of information without indexing or signposting is unacceptable. Insurers may ask more questions of you than before and there is an additional requirement to adequately highlight unusual activities or known areas of concern.

While generally a positive step forward for you, if you don’t comply with your new duties, insurers will have a new range of “proportionate remedies”, which could include reducing your claim payments significantly.

What can you do to prepare for the Act?

• Start the renewal process earlier; engage with us to start the process earlier than usual, this will allow extra time for data-gathering and will enable us to talk to insurers about what information you are going to search for.
• Identify who forms your “Senior Management team”; as you will have a duty to disclose relevant information known by your senior management, start to consider who falls within that definition in your company.
• Review your data gathering process; we can help you review how you intend to gather data and how we present it to insurers, as well as how to record the searches you have made.
• Consider third party information; as you have a duty to disclose information you ought to know, consider whether you will need to talk to contractors or consultants to gather data. 

If you are an existing client, don’t worry we will guide you through any changes required around renewal. If you are yet to become a client, speak to us now so we can understand your current arrangements.