Com­mer­cial in­sur­ance leg­is­la­tion

The Peterborough Evening Telegraph - - Business -

THE big­gest change to in­sur­ance leg­is­la­tion in over 100 years came into force on Au­gust 12.

The leg­is­la­tion aims to cre­ate a new and fairer bal­ance be­tween pol­i­cy­holder and in­surer as well as raise pro­fes­sional stan­dards when in­sur­ance is placed.

But what will the changes mean to busi­nesses?

There will be a new and ex­plicit duty to ask ques­tions of the whole busi­ness not just se­nior staff and prior to the re­newal of poli­cies.

The level of ques­tion­ing and in­for­ma­tion gath­er­ing to pre­pare re­newals may in­crease depend­ing on the size and na­ture of the busi­ness.

Pol­i­cy­hold­ers will have to ask any­one ben­e­fit­ing from cover whether they know any ma­te­rial in­for­ma­tion in re­la­tion to the risk.

In the event that key ma­te­rial in­for­ma­tion is not pro­vided to the in­surer and is later dis­cov­ered, the in­surer can add in new ex­clu­sions or sub lim­its that ap­ply from the in­cep­tion of any pol­icy.

In­sur­ers could also ap­ply pro­por­tion­ate pay­ments dur­ing the claims process if the risk would have at­tracted a larger premium had they been in re­ceipt of the ma­te­rial in­for­ma­tion at in­cep­tion.

Other im­pli­ca­tions of the changes:

In­sur­ers will lose their his­toric rights to re­pu­di­ate claims for breaches of con­di­tions ir­rel­e­vant to the loss suf­fered

Un­der­writ­ers will need to al­lo­cate more time to re­view each sub­mis­sion and con­sider the risk

All pre­sen­ta­tions (of a client’s in­sur­ance risks) must be rea­son­ably clear and ac­ces­si­ble to the in­surer, which means that sim­ply pro­vid­ing a link to a web­site or send­ing lots of data in an un­struc­tured for­mat will not meet the new leg­is­la­tion stan­dards. The Act specif­i­cally ex­cludes ‘data dump­ing’.

It is still early days to get to grips with many of the amend­ment s-which­may seem com­pli­cated and dif­fi­cult to fol­low.

Risk pro­files are dif­fer­ent for all sorts of com­mer­cial busi­ness in­sur­ance poli­cies and some ele­ments of the new leg­is­la­tion will be more rel­e­vant than oth­ers.

The best ad­vice is to dis­cuss the im­pli­ca­tions of any changes to in­sur­ance leg­is­la­tion with your bro­ker be­fore pol­icy re­newals.

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