Media - Flaxmans in the Press
“The larger the claim the more carefully the insurer will look at their liability to pay it.”
Almost every broker has experienced this unwelcome attitude by some insurers to paying a client’s more substantial claims. It is a fact of modern insurance business life and we simply have to deal with it when it arises.
In October Roger Flaxman, our Chairman, was interviewed by Charlotte Parkinson for the magazine Modern Claims* about whether the new Insurance Act 2015, which comes into force on the 12th August 2016 will make a difference to underwriters’ attitudes to paying claims? Amongst his several answers he said “The Act is not going to change the underlying principles of insurance very much but what will change perhaps most of all are the legal benchmarks that will be used to determine whether a policyholder has made a fair presentation of the risk.” This is likely to be fertile ground for disputes about cover. For certain the terms of the new law will have an impact upon the remedies available to underwriters and for certain there will be some degree of “finding their feet” as lawyers and loss adjusters experiment with their various interpretations of how the law should be applied.
It is important to appreciate that the new Act does not replace the Marine Insurance Act 1906 but, rather, the new Act modifies its provisions. Utmost Good faith is not abolished. It is modified as to its implications.
Further, the fact that the Act abolishes the use of the “basis clause” (which converted a statement in a proposal form to the status of being a warranty) will cause insurers and their legal advisers to be even more vigilant about the nature and relevance of material facts disclosed by the policyholder. This in turn will put pressure on commercial policyholders and their brokers to make enquiries within their senior management about material facts that ought to be have been disclosed.
TOP TIP 2016
If there is one top tip for all brokers before the new Act comes into force it is to take the time to understand the implications of the obligations to make a fair presentation of the risk. The Act is an intelligent and clever piece of legislation and undoubtedly has benefits to policyholders but only if they are scrupulously honest with insurers about their material facts. Brokers have a more onerous role to play in that now and it will often take more time prior to renewal to meet the expectations of the Act’s provisions.
To read the full article click here.
*Reproduced by kind permission of Modern Claims Magazine.
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