WILLIS

Three key changes
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Fair Presentation
The new Act adjusts the disclosure
obligations by requiring the insured to
make “a fair presentation of the risk”
to the insurer including “disclosure of
every material circumstance which the
insured knows or ought to know or gives
sufficient information to put a prudent
insurer on notice that it needs to make
further enquiries.”
Knowledge is by senior management and
persons responsible for the insurance
arrangements. It includes what ought
to or should be known in the ordinary
running of the business. It must be
disclosed in a straight-forward and
concise manner to minimise ambiguity
and misunderstandings.
Under current law, in the event of material
non-disclosure or misrepresentation, the
insurer is allowed to void the policy and
refuse to pay claims, even for the most
trivial or accidental breach.
The new Act introduces the concept of
“Proportionate Remedies”. The insurer
would have to show that, but for a
breach of fair presentation, it would:
1. Not have accepted the insurance at
all; or 2. Have done so on different terms
If the breach is deliberate or reckless,
the insurer: 1. May avoid the contract of
insurance, refuse to pay all claims; and 2.
Refuse to return any premium paid.
Where the qualifying breach has been
neither deliberate nor reckless then
the new proportionate remedies will be
applied:
1. If the insurer would not have entered
into the policy on any terms, the insurer
may avoid the policy and refuse to pay
all claims, but must return the premiums
paid.
www.willisinsurance.co.uk
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