Caveat Emptor? - How the Insurance Act 2015 should change the way you renew your policies.

The new Insurance Act 2015 comes into force on the 12th August 2016.  It will change the way both insurers and broker alike will work.

The following are the main headlines to the history and changes the act represents: 

• The Marine Insurance Act 1906 has been the bedrock of the insurance industry for over 100 years. Beyond case law, The Insurance Act 2015 is the first major change in insurance law for over 100 years.
• The changes that will come into force in August 2016 will have a significant impact on how insureds and insurers approach policies, and on the role of insurance brokers as agent at placement and when there has been a breach of terms and conditions.
• The Insurance Act 2015 applies to all policies governed by the laws of England and Wales, Scotland and Northern Ireland that are placed (or adjusted) after 12th August 2016.
• The new law is principles based, rather than a rigid code: this is to reflect the fact that it applies to micro-businesses as well as FTSE 100 insureds and reinsurance, and its duties therefore need to be flexible.
• The Act applies to both business and consumer insurance, although the new duty to make a fair presentation only applies to business insurance contracts with the consumer (personal lines) equivalent dealt with under the Consumer Insurance (Disclosures and Representations) Act 2012.

 The act itself can be broken down to a simplified set of sections which your insurance broker will be able to run through under these headings:

1. Fair presentation of risk
2. Proportionate remedies
3. How warranties work

Regardless of the relationship with your existing broker, the period you’ve been with them lends itself to increasing complacency over time, with assumptions rather than fact creeping in year on year. Many clients and their brokers find it easier to renew on existing terms and not perform the full annual review required to give both parties the protection need to achieve true risk transfer and professional standards correspondingly.

When your renewal falls due or you make a change to your policy from the 12th August, therefore, it is vital that you seize this opportunity to, not only make time to spend going through every detail of your business with your broker and avoid the ‘nothing’s changed’ phone call, but also to think whether you’ve received the service you deserve as a customer over the years with assumptions and salesmanship not taking the place of professionalism and due diligence.