In February this year the Insurance Act 2015 received Royal Assent, and will be coming into force in the autumn of 2016. Perhaps the most key change from the original insurance act is the duty to make a “fair presentation” of the risk.
Relating specifically to the disclosure of material information which the insurer requires to make their assessment, the ‘fair presentation’ requires closer scrutiny from the insurer as well as the insured.
How Does It Affect The Insured?
There are two exacting points that the insured must address in order to be safeguarded:
As the insured you must disclose all information that you know, or ought to know.
The insured must ensure that the insurer has enough information about the matter, so that if the insurer ought to know enough in order to make further inquiries if necessary.
Simply put, you must tell the insurer everything that you know and in as much depth as you can. This prevents situations where the insurer gets lumbered indiscriminately with a pile of information, which hasn’t had the key aspects highlighted.
It has also become a prerequisite that any members of the insured’s company who has a key/senior role to play in the organisation of the company’s activities must be aware of, and accountable for, all relevant knowledge and information pertaining to the company’s insurance.
This ‘knowledge’ is defined as being ‘information that could be expected to be found by a reasonable search of information held by the insured, its agent(s), or co-insured.’
This change in the law also puts more responsibility on the head of the insurers, rather than the current law which focuses solely on the insured. As such, insurers must demonstrate that they have asked the right questions in order to ensure full disclosure.
Image by Alan Cleaver