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The Insurance Act

1. Executive summary

airmic 1st June 2016

One of the headline features of the Insurance Act 2015 (the Act) is the removal of the sole remedy available to insurers of avoiding a policy (ie. treating it as if it never existed) in the event of a material non-disclosure or misrepresentation by the insured.

The Act introduces a series of ‘proportionate remedies’ which are available to the insurer depending upon whether or not the insured’s breach of the duty of fair presentation was deliberate or reckless and what the insurer can show it would have done had the insured complied with its duty.

One of the new remedies that will be available is where an insurer can show that it would have charged a higher premium had it received a fair presentation of the risk. In this situation, the insurer can proportionately reduce the claims payment made to the insured.

The objective of this briefing is to provide members with a sample clause to enable an alternative remedy to be agreed with insurers such that the insured pays the additional premium that would have been charged rather than face a reduction in its claim.

This briefing builds on Airmic’s other recent guidance on the Insurance Act:

• Insurance Act 2015: Taking advantage of the Act’s benefits now -
https://www.airmic.com/technical/library/insurance-act-2015

• Insurance Act 2015: A guide to fair presentation -
https://www.airmic.com/technical/library/insurance-act-2015-guide-fair-presentation

• Insurance Act 2015: What members need to know -
To be published

This briefing has been produced with the assistance of Herbert Smith Freehills LLP as a preferred service provider to Airmic.

The content of the briefing relates to the position under English law and does not constitute legal advice. Members are advised to consult their lawyers should they require advice on any matter that is the subject of this briefing. Herbert Smith Freehills LLP is happy to discuss any queries that members may have*.

* Please contact Paul.Lewis@hsf.com

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