The Insurance Act 2015 was finally introduced and written into law on the 12th of August 2016. With its introduction come a number of reforms for a variety of important areas which cover the legal framework of insurance contracts. The act aims to bring about fairer and more balanced remedies but does also lay out a number of responsibilities to both the insured and insurers.
Are you making a fair presentation of risk?
The act introduced ‘Fair Presentation of Risk’ which requires policyholders to disclose material circumstances that are known to them and also what they as decision makers within their business ought to know.
The act states that:
• Policyholders should give sufficient information so as to put a prudent insurer on notice that it needs to make further enquiries.
• Burden of disclosure stays with the insured however insurers and in turn brokers are required to take a more proactive approach to enquiries into the policyholders business.
Introduces Fairer Remedies
• Reckless or deliberate breaches could result in the insurer voiding the policy and keeping the premium.
• An insurer could take the same action that it would have taken had a fair presentation of risk been made at the time of taking out the contract, but only if the breach is deemed to be neither reckless nor deliberate.
• If the insurer would not have provided cover if the material facts were originally made available they can void the policy but the premium must be returned.
• A proportionate remedy could apply if the insurer would have offered different terms had the policyholder made a fair presentation of risk. The insurer can in these situations opt to treat the contract as having been entered on those different terms and in cases where a higher premium would have been charged, they can reduce any claims paid in proportion to the amount that has been under paid.
The Insurance Act 2015
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