Possible Future Reforms Flashcards
What will the Insurance Bill 2014 change in relation to representations made by the insurer if enacted?
Places duty on insured in commercial insurance to make to the insurer a fair presentation of the risk (s3(1)). Such a duty requires disclosure of every material circumstance which the insured knows or ought to know; or disclosure which gives the insurer sufficient information to put a prudent insurer on notice that it needs to make further enquiries for the purpose of revealing material circumstances (s3(4)).
The insured need not disclose information that the insurer knows, ought to know or is presumed to know or where the insurer waives the duty of disclosure (s3(5)). The duty of fair presentation of the risk also requires that every material representation by the insured as to a matter of fact be substantially correct and every material representation as to a matter of expectation or belief to be made in good faith (s3(3)). Remedies for breach of the duty of fair presentation of the risk by the insured entitles the insurer to exercise remedies which are set out in Sched 1 (s8). Breaches are categorised as deliberate or reckless or neither deliberate or reckless and remedies available to insurers depend on the category of breach. Statutory duties regarding disclosure and representations under the Marine Insurance Act 1906 and common law duties to the same effect are abolished (s19(2) and (3)).
What will the Insurance Bill 2014 change in relation to warranties?
A representation made by the insured in a commercial insurance contract is not capable of being converted into a warranty by a basis of the contract clause (s9).
Any rule of law that breach of warranty results in the discharge of the insurer’s liability under the contract is abolished (s10(1)).
An insurer is under no liability under the insurance contract in respect of any loss occurring or attributable to something happening after a warranty has been breached and before the breach has been remedied (s10(2)).
What will the Insurance Bill 2014 change in relation to fradulent claims?
If an insured makes a fraudulent claim the insurer is not liable to pay the claim and the insurer may by notice to the insured treat the insurance contract as having been terminated with effect from the time of the fraudulent act (s11(1)). If the insurer does not treat the contract as having been terminated the insurer can refuse all liability to the insured in respect of a claim occurring after the time of the fraudulent act and need not return the premiums paid (s11(2)).
Any term of a consumer insurance contract which would put the consumer insured in a worse position in relation to warranties or the effect of making a fraudulent claim than he would be under the provisions of the Insurance Act 2014 are of no effect (s14).
What will the Insurance Bill 2014 change in relation to the utmost good faith rule?
Any rule of law that allows a party to avoid an insurance contract on the ground that the utmost good faith has not been observed is abolished and any rule of law that a contract of insurance is a contract of the utmost good faith will be modified by the Insurance Act 2014 and the 2012 Act (s13).
What will the Insurance Bill 2014 change in relation to commercial insurance contracts?
Any term of a commercial insurance contract which would out the insured in a worse position in relation to a representation being elevated to a warranty is of no effect (s15(1)). Any term of a commercial insurance contract which would put the insured in a worse position in relation to disclosure, representations, remedies available to an insurer, breach of warranty or the effect of making a fraudulent claim than he would be under the provisions of the Insurance Act 2014 are of no effect unless the insurer has taken sufficient steps to draw the term (referred to as a disadvantageous term) to the insured’s attention before the insurance contract is entered into and the disadvantaged term must be clear and unambiguous as to its effect (s15(2) and s16).
