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The UK Insurance Act 2015: Are you ready?

  • United Kingdom
  • Insurance and reinsurance

09-12-2016

Précis

The Insurance Act 2015 came into force on 12 August this year. The Act reforms insurance law, which has been embedded in our legal system for around a century and is an important piece of legislation for all of us involved in the Health and Life Sciences Sector. The law in respect of material non-disclosure and misrepresentation has been seen for some years to be heavily weighted in favour of insurers and being unfair to insureds. The Act seeks to redress this issue.

What?

The Act replaces the duty to disclose material facts with a new duty to make a fair presentation of the risk and provides new remedies in the event of a breach of this duty. These remedies are proportionate and are generally speaking, more favourable to insureds than the previous position prior to the coming into force of the Act. Further, insurers’ ability to rely on certain terms such as warranties and conditions precedent to decline paying claims, is now limited to circumstances where a loss is connected to a breach of warranty or condition precedent.

So what?

The insurance programmes of organisations in the Health and Life Sciences Sector are typically highly complex, multi-jurisdictional and can be subject to negotiation with insurers; and these factors all make the Act especially relevant. In broad terms the Act is favourable to insureds although, businesses now need to consider whether they should be contracting out of parts of the Act. Businesses which are subject to the new duty to make a fair presentation will need to review and update processes to ensure compliance and agree the various definitions with insurers. We recommend that this review is undertaken as soon as possible before renewal. It is essential that insureds understand the workings of the Insurance Act 2015 and how the law has changed, so that insureds can protect their position as best they can in respect of disclosure to insurers, thereby minimising the risk of policy avoidance.

We attach a guide which has been prepared by the Insurance & Reinsurance Team at Eversheds. However, this is a general guide and there will be issues which are unique to your business and sector. View the Insurance Act Guide.

 

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