What impact has the Insurance Act 2015 had on UK businesses?

We’ve seen speculation in the market place about the impact of the Insurance Act 2015 on businesses, particularly with regards to potential likelihood of a claim being successful . At BJP Insurance, we’ve always striven to work closely with clients, taking time to fully understand their business. We take professional pride in ensuring that the insurance risks faced by any business are fairly represented to insurers. In this respect, it’s been ‘business as usual’ for us. Notwithstanding, here’s a simple overview of what the Act is all about.

Why The Insurance Act 2015 is important to your business

Last August saw the introduction of the 2015 Insurance Act. It’s generally been accepted as a good thing for UK businesses, bringing Commercial Insurance legislation up to date and addressing the perceived imbalance in English law in favour of insurers. It means that at a point of difficulty – typically when a claim needs to be made – a policy can be more readily viewed as contingent capital, available to sooth a business through a crisis.

What difference does The Insurance Act 2015 make to commercial insurance policy holders?

In our original Insurance Act blog back in July of 2016, we set out in some detail the full potential extent of the changes in law. The Insurance Act makes a difference in two, key ways: It puts more onuses on the insurer to discover key information about the insured in the first instance. It also provides less ‘wriggle room’ for an insurer to use erroneous or non-disclosed information to avoid a claim, particularly when that information has no bearing on the claim being brought. However, to achieve these benefits to the policyholder, the act does require different demands and requirements in certain areas.

As a business policyholder, it would be prudent to make a number of checks and considerations in light of the changes:

  • Review your processes for collating information for disclosure to ensure you are meeting your ‘fair presentation of the risk’ requirements.
  • A key difference in the new legislation is is that while the business has to make all reasonable disclosures based on all information available, the onus is on the insurer to ask any reasonable additional questions. It means that the insurer no longer has the right to avoid a claim on the basis of a breach of duty of the utmost good faith. Documenting what has been used would seem to make the position extremely clear.
  • New policy wordings are already being seen. The Insurance Act 2015 may be a great opportunity for your business to negotiate better wording, for example in limiting the insurers remedies in the event of an innocent or negligent failure to give fair presentation.

As a business owner or manager, you might historically have viewed your insurance policy as something of a ‘grudge’ purchase. Depending on your business, it’s likely to be compulsory, or simply something that your customers or clients expect to see before working with you. Bought incorrectly, insurance can be a cost with limited, or no benefit where the insurer may find evidence of under insurance or no insurance cover whatsoever because the ‘wrong’ policy has been purchased.

Bought correctly, insurance is an asset to your business, not a cost. The Insurance Act 2015 means there are potentially more ways to clarify your disclosure process and fewer loopholes that the insurer can use to avoid a payout. What is more, presenting all relevant evidence may assist in driving down costs because it could highlight areas or levels of cover you simply don’t need.

At BJP Insurance, we strive to be more than providers of a piece of paper. We set out to be trusted business advisors. If as a business owner or manager you have any questions about the Act, get in touch with one of our team. Whether an existing client or not, we’ll be happy to discuss your questions.