Insurance Act 2015

JEIB_________________________________________________________________The Insurance Act 2015, updated insurance law in respect of general insurance for commercial
customers will come into force on 12th August 2016, changing the current law under the Marine Insurance
Act 1906, follows the principles of the Consumer Insurance (Disclosure & Representations) Act 2012.
It will apply to all policies that renew, incept or are varied on or after 12th August 2016.
The Duty of Fair Presentation
You are responsible to give a ‘Fair Presentation of the Risk’ before an insurance contract is arranged.
lDisclosure of every material circumstance which is known by your senior management and thoseindividuals responsible for arranging your insurance (risk managers and/or employees assisting in thecollection of data or your brokers) or ought to know, orl

Disclosure of sufficient information to put the prudent insurer on enquiry.

When such disclosure is made, you should take care to ensure that details provided are complete andaccurate.
When using a proposal form, your duty of disclosure may not be confined to answering the specific questions
listed in the form. If you are not sure whether your insurer(s) need particular information, we would recommendthat you provide it to your insurer(s).
Q: “We are not sure what is MATERIAL and what isn’t.”
A: If it would influence the judgment of insurer(s) in setting the premium, terms and accepting the risk, it isMATERIAL circumstance.
Q: “When do you need to disclose the information?”
A: Throughout the negotiations- incepting, renewing, and/or changing your policy.
Q: “What is the consequence of ailing to disclose a material circumstance?”
A: Your insurer(s)s’ remedy for no-disclosure will depend on whether your failure to disclose or
misrepresentation was deliberate or reckless. Please see page 2
Changes to Warranties and Other Terms
Currently a breach of warranty allows the insurer(s) to terminate cover as at the date of breach even if thebreach was not relevant to the loss occurring.
Under the Insurance Act 2015: Your insurer(s)’s liability for cover is suspended only from date of breach until
the breach is remedied and the policy resumes once the breach is remedied.
Under the Insurance Act 2015: The Policy Clauses that turn all the disclosed information into a warranty (Basisof Contract Clauses) are strictly prohibited.
Insurers Remedies for Fraudulent Claims
if a part of claim is fraudulent, your insurer(s) may not pay the claim and have the right to recover the premium
paid prior to the discovery of the fraudulent act from the insuredYour insurer(s) will be liable for losses up to the fraudulent act but can treat the policy as having beenterminated at the point when the fraudulent act was committed.

This guidance note is based on sources we believe are reliable but does not constitute legal advice. If you have any questions,please do not hesitate to contact your usual JEIB contact.
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JEIB

Insurance Act 2015_________________________________________________________________
Duty of Fair Presentation of Risk
<IMPORTANT>
You must disclose every material circumstance which is known by your senior management and any
employee(s) who arrange your insurance policies.
Your duty of disclosure applies until your insurers have accepted the risk and your duty arises again if you
make changes to the policy placed and during your policy renewal.

l

You are responsible for providing the accurate information
and a fair presentation of risklDisclose all material facts which insurers should know,or ought to have known, following reasonable search

Failure to Fairly Present the Risk
or
Failure to Disclose Material
Circumstance

Deliberate or Reckless Breach

Non-Deliberate or Non- Reckless Breach

Would insurer(s) have still taken the risk?

NOInsurer(s) may avoid the contract
butRefund the premium

Insurer(s) may avoid the contract
andRefuse all claims and may retain the premium
YES1) If Insurer(s) would have written on different terms,
the policy may be treated as if those terms applied
from the start2) If Insurer(s) would have charged a higher premium,
the amount paid on a claim may be reduced
proportionately.
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