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Introducing the Insurance ActWednesday 3rd August 2016

On the 12 August 2016 the business insurance world is undergoing a major change with the introduction of new legislation – The Insurance Act 2015 - which aims to clarify what businesses need to disclose, and the remedies available to Insurance companies should this full disclosure not occur.

The Insurance Act will impact on the disclosure obligations when a business takes out and renews any business insurance subject to the laws of England and Wales, Scotland, and Northern Ireland.
It’s the biggest change to English insurance contract law in over 100 years. Higos Insurance Services very much welcomes the Act, which corrects a disparity in the existing law, which can sometimes favour insurers. 
The key changes are as follows:
  • Reasonable search – clients must make full enquiries within their businesses to clarify what risks they have and must include all knowledge of the senior management, all those involved in purchasing insurance for their business and any relevant parties involved in the business including consultants, contractors and anyone covered by the scope of the policies
  • Clear & Accessible Information - must be presented in a clear and accessible manner and specifically highlight any areas of concern which could impact on the risk
Under the act you now have a duty to be open, honest, transparent and fair when presenting your business to us.
How does the Insurance Act impact on my business?
  • We will be asking for more information because we want our clients to continue to be properly insured
  • We will be qualifying and probing answers in greater detail
  • Particular focus will be given to sums insured to ensure they have been assessed correctly
  • We will be looking at our clients overall insurance programme, not specifically focusing on specific products but rather their unique ‘risk’ profile
  • We will spend more time speaking to our clients, engaging in active two way dialogue to ensure you have the insurance policy in place which is the right fit for your business

What happens if the information is not correct and a claim occurs?

  • In the event a client is found to have been reckless or deliberately provide a lack of information or incorrect information, Insurers can void the contract, not pay the claim and keep the premium
  • If not deliberate or reckless but the Insurer would NOT have underwritten the policy then the contract is voided, with the claim not paid but the premium returned to the client
  • If not deliberate or reckless but the Insurer WOULD have underwritten the risk then they can apply the terms and premium that would have applied (essentially retrospectively applying terms)
  • If not deliberate or reckless but insurer WOULD have underwritten the risk but would have charged a higher premium then the insurer may proportionally reduce the amount to be paid out. This can be to ANY section of the policy
What are Higos doing about the implementation of the Act?
  • We have changed our information gathering documents to be far more wide ranging and specific
  • We will advise our clients on all your insurance requirements, not just focusing on one particular product (unless you specifically ask)
  • We will email information and documentation so our clients can retain this on their systems, rather than in a paper format
  • We will continue to regularly communicate with our clients throughout the year, not just at renewal
  • We will clearly detail the services we provide to our clients and their obligations to us

Additional information can be found here.
All of the new processes we have adopted ahead of the implementation of the Insurance Act are designed to ensure our clients have the correct level of business protection in place so, in the unfortunate event you do make a claim, your claim is settled in full, allowing you and your business to continue trading with minimal disruption.
We look forward to helping new and existing clients prepare for and understand the implications of the Insurance Act.  To find out more call Higos on 01749 834 500.
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