Lloyd’s of London started in the 17th Century in a coffee house near the River Thames. The first class of business was marine insuring against things such as storms and piracy. The ship owner gave information about the risk to the merchant on a slip of paper and the merchant decided if he was to accept the risk by writing his name on the slip of paper under the details that is where the word “underwriter” came from.
In the past the declarations signed by the proposer formed the basis of the contract and hence a warranty. This has now all changed since the implementation of the 2015 Insurance Act.
So how does this affect you?
What is the duty of fair presentation There is now a duty of fair presentation and this means a duty to disclose to Insurers every material circumstance which you know or ought to know that would affect the underwriting of the risk. Or an Insured must give the Insurer sufficient information to put a prudent insurer on notice that it needs to make further enquiries in order to reveal material circumstances. A matter is material if it would influence the judgement of a prudent insurer as to whether to accept the risk, or the terms of the insurance (including premium); disclosure should be in a reasonably clear and
accessible way; and insured’s should insure that every material representation of fact is substantially correct, and that every material representation of expectation or belief is made in good faith. Provided you as an insured comply with the requirements of fair presentation you have a right to be indemnified by insurers if they have not made sufficient enquiries after you gave them adequate information to do so. In these circumstances they can no longer then decline to pay a claim on the grounds of non- disclosure. Critical information must be true and accurate at time of inception of the insurance contract.
What are you expected to know? If an Insured is an individual, what is known to the individual and anybody who is responsible for arranging his or her insurance policies.
If an Insured is not an individual, what is known to anybody who is part of the Insured’s senior management; or anybody who is responsible for arranging the Insured’s insurance.
Whether an Insured is an individual or not, what should reasonably have been revealed by a reasonable search of information available to the Insured. The information may be held within the Insured’s organisation, or by any third party (including but not limited to the broker, subsidiaries, affiliates or any other person who will be covered under the insurance). If an Insured is insuring subsidiaries, affiliates or other parties, the Insurer expects that the Insured will have included them in its enquiries, and that the Insured will inform the Insurer if it has not done so. The reasonable search may be conducted by making enquiries or by any other means.
Breach of warranty is now suspensory
If an Insured breaches a warranty in an insurance contract, the Insurer’s liability under the contract shall be suspended from the time of the breach until the time when the breach is remedied (if it is capable of being remedied). The Insurer will have no liability to an Insured for any loss which occurs, or which is attributable to something happening, during the period when the Insurer’s liability is suspended. Once the breach is remedied you have the right to cover for losses occurring or attributable to something happening after the remedy date.
Failure to comply with terms not relevant to the actual loss does not give the right to insurers not to pay. Where: (i) there has been a failure to comply with a term (express or implied) of this insurance contract, other than a term that defines the risk as a whole; and (ii) compliance with such term would tend to reduce the risk of loss of a particular kind and/or loss at a particular location and/or loss at a particular time, the Insurer cannot rely on the breach of such term to exclude, limit or discharge its liability if the Insured shows that the failure to comply with such term could not have increased the risk of the loss which actually occurred in the circumstances in which it occurred.
Fraudulent claims clause If an Insured makes a fraudulent claim under an insurance contract, the Insurer is not liable to pay the claim; and may recover from the Insured any sums paid by the Insurer to the Insured in respect of the claim; and may by notice to the Insured treat the contract as having been terminated with effect from the time of the fraudulent act.
TThe R eporhe Reportt • • Mar ch 2017 • Issue 79 | 71 March 2017
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76
