October 2016 Credit Management magazine

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in 2012; at the same time the top regional brokers
representing customers in our commercial portfolio
have increased from 27 percent to around 40 percent
over the same period.”
COLLECTIVE RESPONSIBILITY
All of the major insurers support the broker channel with
training, Atradius included: “Across the industry there
is a collective responsibility to raise the bar in terms
of awareness and ‘education’ about the real benefits
available from/through credit insurance and bodies such
as the ABI are working with carriers to develop a more
robust marketing strategy,” he adds.
Sue Morley also sees the broker channel as being
critically important: “The broker channel is vital,” she
says, “certainly to our business model which is solely
brokered business. A credit insurance policy is not an
off-the-shelf product and works best where it is tailored
to that particular business. The brokers offer a valuable
and necessary service in determining the type of cover
required and accessing the credit insurance market
place to find the most appropriate policy for price,
structure and most important, credit limit coverage.”
Andy Moylan agrees: “Brokers have a duty to ensure
that with their help clients are complying with the terms
and conditions of their policy and that they are deriving
maximum advantage from it,” he says.
So what of the new challenges that the industry faces,
and in particular the new Insurance Act, described as
the most significant reform of insurance law in England
and Wales for over 100 years? How fair are the new
rules regarding the Duty of Fair Presentation and other
important areas such as the new remedies for nondisclosure
and warranties?
UNKNOWN QUANTITY
In Frederic’s view, they are not only very fair but also
help to remove much of the ‘unknown’: “They will help
to manage our clients’ expectations in respect of a client
duty to present all that they reasonably can of any risks
the insurer should know about,” he says. “It should not
be exhaustive and the Act provides guidance on what is
a ‘fair and reasonable’ approach.
“As an insurer, there is more onus for us to prove
that the client acted deliberately or recklessly in not
either providing the full facts at the outset of the policy
or alerting the insurer when a risk presented itself. The
insurer must make a judgement on whether we would
have acted differently had we been presented with the
necessary information at the outset. Fortunately, such
cases are extremely rare, so therefore the day to day
impact should be minimal.”
In respect of remedies on breach of warranty,
Frederic also has an opinion: “Previously, breach
of warranty in an insurance contract discharged us
from our obligation to provide an indemnity from the
moment of breach, even if the breach was subsequently
remedied. Breaches of warranty will now serve only
to suspend our liability until the breach is remedied.
Therefore, we are liable for valid claims which arise after
the breach has been remedied, this is a fundamental
change but again, these instances are rare at Coface so
we see no material change day to day.”
Euler Hermes too believes that clients will benefit
from the legal changes the Act provides: “For credit
insurance, the new Duty of Fair Presentation balances
the requirement for the insured to outline the business
The brokers offer a valuable
and necessary service in
determining the type of cover
required and accessing the
credit insurance market place
to find the most appropriate
policy for price, structure and
most important, credit limit
coverage.
they are looking to insure in a clear and accessible
manner, with the need for the insurer to ask the
appropriate questions,” Valerio says. “We have always
sought to clarify the risks involved before underwriting
each policy so this won’t have material impact on our
practices.”
Atradius has confirmed that its policies will be
governed by and interpreted in accordance with the
Act: “Accordingly the Act will apply to all insured risks
and Atradius does not nor will not seek an opt out of
its provisions, which under the Act it could do,” Marc
explains.
SIGNIFICANT MILESTONE
“Whilst it is acknowledged that the Act is a significant
milestone for the industry, we do not anticipate any
significant impact for Atradius’ customers. In our view
the Act in many ways formalises ‘best practice’ standards
within the industry that we had already adopted or
been working towards and so we do not anticipate a
material impact to our business operations. As part
of our strategy of continuous improvement we had
already made adaptations to our proposal procedures/
forms and incorporated additional opportunities for
customers to update ‘anything that’s changed’ into our
working practices; these changes align fully with the
requirements of the Act.”
Nexus CIFS has similarly confirmed that it has chosen
not to opt out of the new Act and has amended its policy
wordings to be compliant. But Sue Morley says that
it is still early days, and the new wording has not yet
been put to the test: “It will probably be several years
before the effect is fully seen and precedent has been
established by the courts,” she explains.
“However the intention is to make an insurance
contract more transparent for both policyholder and
underwriter and in some cases make it fairer to the
Insured, particularly with the late payment provisions
being introduced next year that allow the Insured to
claim damages for the late payment of a claim. If this
helps to enhance insurers’ reputation for fairness and
paying claims and increase take up of the product that
will be a very positive outcome.”
The recognised standard
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