Insurance Made Easy
In case anyone missed it, the Insurance Act 2015 comes into effect today – the traditional start to the grouse shooting season. Coincidence? Time will tell.
On paper, insurers are required to take a more proportionate stance when it comes to disclosure of material facts. Instead of avoiding the claim completely it will be a case of what action would the insurer have taken if they had been in possession of the missing fact at the outset. Underwriting by hindsight doesn’t sound particularly fair to the punter but at least there is now room for discussion.
The trade off is that the corporate insurance buyer now has a duty of disclosure of material facts and what is termed “fair presentation”. This will still require some crystal ball gazing on the part of the buyer and a great deal of guidance from their brokers – but expect plenty of caveats from the brokers. Whilst there has always been a duty to declare material facts, the duty now becomes much more onerous.
A signature on a half completed proposal form isn’t going to hack it. There now has to be a reasonable search for material information, not only internally but this might require information from outside the organisation from suppliers or contractors. This might get messy for businesses with more complicated supply chain risks. Internal records will need to be kept to prove a reasonable search has been made and all information is required to be disclosed in a “clear and accessible manner” – whatever that means.
It will no longer be a case of merely acknowledging the existence of policy warranties and conditions but maintaining a record proving compliance.
The good news is we are here to help. Whilst we will continue working with our clients to implement robust reporting and recording systems we are happy to provide advice to any other business struggling to get to grips with the new rules. We have even devised a “get out of jail” wording for incorporation into risk presentations to try to even things up a bit.
It’s obviously far too early in the new season to be sure if the twelfth will, indeed, prove glorious but we have a sneaky suspicion there will be plenty to grouse about before too long. (Sorry!)