The care insurance specialist

The Insurance Act 2016

The Insurance Act 2015 The new Act comes into force on 12 August 2016 comprising of a new legal framework affecting every commercial insurance policy incepted, adjusted or renewed after this date. The aim of the revision is to modernise the law governing insurance to create a fairer system for policyholders whilst bringing about a simpler landscape, the main crux being the duty of the customer to provide a ‘fair presentation’ of the risk. A summary of the implications of the new rules can be found here:

With this in mind we have put together a few Q&A’s for our customers.

What is the act?

The Act makes five important changes to the law. The main areas being:

Duty of Disclosure & Representation – The existing duty remains and is clarified with the requirement for businesses to make a ‘fair presentation’ of their risk to insurers. (Further information below) 

Remedies for Non-deliberate Non-Disclosure or Misrepresentation - Remedies must now be proportionate and reflect what the insurer would have done if the correct information been provided originally. 

Basis of Contract Clauses – These clauses are now removed which previously allowed Insurers to avoid a policy if risk information provided was not accurate. 

Remedy for Breach of Warranty – Warranties can still be applied to policies by insurers, but any breaches of warranties will result in liability being suspended for the period of the breach and only where relevant to a claim. 

Remedy for Fraud – The new remedy removes the option of avoidance of the Insurer. In the event of fraud, an insurer remains ‘on cover’ for claims made before the fraud occurs but has the option to cancel the policy with effect from the date of the fraudulent act.

What does this mean for me?

The existing duty of policyholders is simplified with the requirement for customers to make a ‘fair presentation of risk’ to insurers. You will need to be prepared to engage with your existing provider or approach new markets earlier than previously.

What is a fair presentation of risk?

This is defined as “every circumstance which the insured knows or ought to know. However failing that, sufficient information should be provided to alert an insurer that they need to ask further questions”. If you are in doubt then you should disclose to us. The presentation you provide must be clear and accessible, any ‘data dumping’ of large amounts of information without signposting is not allowed. There is also an additional requirement to highlight any unusual activities and/or known areas of concern.

What is a reasonable search?

You must make satisfactory requirements within your business to identify the information relevant to the risks concerned which includes a consultation of all of your senior management team, which also includes your insurance broker. You should also ensure that you make reasonable enquiries to any third parties involved in the business such as contractors.

What are Quality Care Insurance Services/Quality Insurance Services doing about the act?

We aim to start our renewal and new business process earlier to ensure we have enough time to gather the relevant information and allow for additional questions and queries from Insurers to be answered. We also aim to help you in ensuring that you have made a fair presentation of your business risks and understand the implications of any non-compliance with warranties.

Other Articles

Welcome to Quality Care Insurance Services  Quality Care Does Comic Relief!  My Insurance won't cover flood  Immigration Law Compliance for Care Homes  Summer  Nights are drawing in  Hurricane Season  QCIS joins the Cuckfield Christmas Tree Festival, 2016  Cyber Regulations  £221 raised for Macmillan  Sarah's 10 Year Anniversary   Team Member Complete's Tough Sh!t Challenge  Charity Christmas Song  Team Member Completes Cambodia Trek!  QCIS supports The Cuckfield Christmas Tree Festival  Charity Events  Care Home Success Story  GDPR  Fire!  GDPR- It's Here At Last!  Cyber Insurance- What will you get from us?  Cyber Insurance  Energy  Outstanding CQC Rating Group  Warning To All Care Home Owners  Changes to your Business  Skills for Care   Pollard's Promises  Pollard's Promises- i360!  Save on your Energy Bills This Winter  Top 10 Care Home Insurance Cover Mistakes  CareLine  Chartered Insurance Institute Exams  Cuckfield Christmas Tree Festival 2018  Save Money on Energy Bills this Christmas  Christmas Opening Hours 2018  QCIS partners with Essex Care Association  Utilitywise have gone into Administration  QCIS Supports Circus Starr!   Charity Business Awards  Care Conferences  Protecting Your Personal Assets  How will Brexit impact the Care Sector  Should Wi-Fi be a priority for Care Homes?  QCIS are British Insurance Awards Finalists!  QCIS is 10 Years Old!  QCIS Win SME Risk Initiative of the Year Award!  Guide to Under Insurance  Recruitment in the Care Sector  The Importance of Life Cover  QCIS Awards  Pollard's Promises- Colchester Zoo  CCTV in Care Homes   Care Homes being Prosecuted  Peru Trek for Chestnut Tree House  Cyber Threats in the Care Sector  QCIS Win Schemes Broker of the Year!  The What, Why, How and When of Directors and Officers Insurance  Lorrie Reports On Her Inca Trail Challenge  Winter Months Risk Control  COVID-19 (Coronavirus) - QCIS Business Response  The Alarming Rate of Attrition in the Care Sector  Buildings Under Insurance -A Note of Caution