As of August this year, reforms in insurance contract law will mean changes in current policies for business owners. Beacon is urging businesses to work with their brokers to prepare for the changes and ensure they are fully compliant.
The Insurance Act 2015 has been in progress with the Law Commission since 2006. Coming into effect in August 2016, the Act will remove any areas of ambiguity for policyholders and will apply to any policies that are renewed or varied from that point onwards.
Teri Humphries, Category Manager for Utilities and Services at Beacon, offered her knowledge and advice for businesses to prepare for the changes.
“Under the new act there are three main areas of change: 1) How information is presented to the insurer; 2) Warranties and conditions and 3) Fraudulent claims. Essentially, the Act will make the insurance contract fairer for businesses, with remedies for any breaches being totally proportionate i.e. the Insurer will no longer be able to simply void the contract and not pay a claim. In return, businesses will need to take greater responsibility in providing clear and concise information to the Insurer.”
Working with its leading insurance suppliers, ICB Group and Jelf, Beacon is offering the following advice to business owners to prepare for the changes:
The Duty of Fair Presentation requires the Policyholder to disclose all material products to Senior Management and/or anyone who is responsible for arranging the insurance policy, which includes any board members, subsidiaries or trustees. In order to remain compliant, businesses should soon identify who their senior team is and establish a clear line of communication throughout the company.
Allow yourself time
Before the Act, businesses would be allowed to ‘data dump’ information on insurers to handle. However, under the new Act, presenting large amounts of information with minimal instruction is considered unfair. Businesses should take time to ensure all information is presented and signposted clearly in order to remain compliant with the new Act.
Work closely with your broker
Businesses are likely to see changes ahead of the Act, if they haven’t already, which could include amendments to some contract clauses to move in line with changes laid out under the new Act. Businesses should seek clarification from their broker or an external body for any changes that are described as Insurance Act compliant.
“Legislation changes and ensuring you change in accordance with that legislation can be daunting for any business. My main piece of advice to business owners is to encourage your key stakeholders to communicate throughout your business and contact your insurance broker to help you navigate these changes.”
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