Preparations, frustrations and opportunities: members give their views on the Insurance Act 2015

With the Insurance Act less than one renewal-cycle away, Airmic News spoke to members about what they are doing to prepare. It was a mixed response. While some feel their work is already done, others are frustrated with the slow response of their underwriters. All feel the reform is unquestionably good news.

Nigel Blore, head of insurance, TFL

“It has to work both ways. We need to fulfil our side of the bargain as well.”

Since the idea of the law reform was mooted we’ve been working with our brokers to try to get wordings amended to fit the spirit of the proposed law. We have used Airmic guidance to look at the wordings.

We’ve had some success but some insurers have pushed back. They were happy in principal but didn’t want to commit to it in black and white. But we’ve been preparing the ground.

We will certainly be looking for them to codify the changes before the implementation date and we hope that we can change our wordings at the next renewal. I’d hope that they’d be more willing now it’s law.

I am absolutely wedded to the idea of good faith. Our insurers understand us well enough to know that we wouldn’t knowingly breach a condition or deliberately not disclose something. Both parties should know each other much better and therefore should be able to trust each other that much more when it’s large companies buying insurance.

But it has to work both ways. It’s very important that buyers don’t seek to exploit this by failing to disclose what they reasonably should. We need to fulfil our side of the bargain as well.

Head of insurance; anonymous

“We are not seeing any progress among insurers that they really understand the implications of the Act.”

These are very big changes, and moving towards the concept of fair presentation is enormously helpful. With the old law, the onus is so high it’s almost impossible to present adequate information.

There will be some challenges. For example, we have to find ways of satisfying insurers: we don’t want to give them the same information as before and then find they come back to us with loads more questions. Also, what is considered data dumping? With a complex risk I might feel I need to present six hundred pages of data, but will they consider that data dumping?

I want to know what insurers are doing about the changes. We‘ve asked our insurers several times, do you consider what we are currently doing fair presentation?  I keep getting a stony silence. Now it’s an Act, we are actively seeking their feedback but I think they will only engage when they have to.

I doubt anything really meaningful will be resolved before the law changes. We use large parts of the market in co-insurance and reinsurance, so we are always restricted by whoever moves at the slowest speed and we are not seeing any progress among insurers that they really understand the implications of the Act.

Bill Brannan, deputy head of insurance, RBS

“Our insurers and brokers took the view that it is not a satisfactory response to say no.”

At RBS, we have been pro-active and ahead of the game. With the law change in mind, we took a close look at all our insurance policies around two years ago and actually most of our key policies already contained suitable wordings, for example the omission of basis clauses and allowing for innocent non-disclosure and/or innocent misrepresentation. This meant we were effectively already compliant. There were some policies which were not fully compliant, but we have now worked closely with our brokers and insurers to change these. 

Anecdotally, I am aware, through discussions with our brokers, that other policyholders have tried to get their insurers to contract according to the new law, but the insurers have been reluctant to do so as they did not want to be the leader, preferring to wait and see what the market response was. Fortunately, this has not been our experience.

Our insurers and brokers took the view that it is not a satisfactory response to say no. The insurers took the view that if they did not act, then we may have seen this as being a negative against them.

Over time, we hope the spirit of the new Act will become the natural way of thinking. It is ridiculous that we are still governed by a law, created in 1906, and sadly it has taken such a long time to remedy this. Airmic has once again proved to be very effective and their efforts here are invaluable.

Georgina Squire, head of dispute resolution at Rosling King LLP

“If it’s a very large claim we do find that insurers will pour through the wording”

I think the Insurance Act is very good for policyholders. At the moment, if there is a large claim we do find that insurers will pour through the wording for, for example, a breach of warranty or non-disclosure of key information. 

Things have changed over the last five to ten years as it’s now much more commercially-driven these days and increasingly insurers like to get the lawyers involved. If the claim is large I find that, if not to refuse the claim altogether, they try to negotiate a reduction – even if they have a strong relationship with the client.

But I hope insurers will be as receptive as policy holders to making the changes quickly. Even over the last two years we are increasingly seeing policy wordings include innocent non-disclosure clauses, which is encouraging.

Overall, this is a very good move for the UK as a centre for international insurance. I do a lot of work in Europe, and overseas and international policyholders view our laws as out-of-date which has led them to insure in another market as a result. I’m delighted it’s come through.