With implementation just weeks away, aspects of the UK’s new Insurance Act are likely being overlooked, while the insurance market has been criticised for a lack of consistency.
Risk management software and technology firm Ventiv also said that it does not believe UK risk managers are taking the full data and reporting implications of the act seriously enough, and brokers are not doing enough to support their customers.
The Insurance Act 2015, which applies to commercial insurance policies under English law from 12 August, brings in new duties for buyers around disclosure. It also introduces proportional remedies for breach of warranties and innocent non-disclosure.
The Act touches on many aspects of multinational insurance arrangements, some of which will not be immediately apparent, especially for non-UK companies.
The most obvious implication is for primary insurance and global programmes placed in the UK. However, the Act will also apply to multinational programmes that are placed outside of the UK, which include local UK policies as part of the programme, where the local policy is governed by the laws of England and Wales, Scotland or Northern Ireland.
In addition to this, the Act may also apply to insurance contracts for excess layers and captives, as well as reinsurance contracts if they are governed by one of the applicable laws, explained Charles Beresford-Davies, managing director and UK risk management practice leader at Marsh in London.
While policyholders have focused preparations around their primary insurance placements, it is possible that they may have not have given sufficient consideration to their excess layer policies and any captive or reinsurance, he said.
Dialogue with European companies over the Act has increased but this has not resulted in any material shift in buying, said Mr Beresford-Davies. “We have not seen any notable changes in the choice of governing law, programme structures or buying patterns at this stage,” he said.
On the surface, risk managers at UK companies are thought to be relatively well prepared for the Act, although the picture becomes less certain once you drill down.
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