TODAY marks the anniversary of the enactment of the Insurance Act 2015 and leaves exactly six months before the first policy is incepted to which the new law will apply. On that date substantive parts of the century old Marine Insurance Act 1906 will be amended, varied or in effect repealed and to add to the “mix” we anticipate the “late payment” clause (see previous blogs on the Enterprise Bill) will be enacted but not yet “in force”.
It does therefore seem timely to review where we are and what needs to be done before 12 August. There is a sense that the pre-implementation work is picking up. This is inevitable as the deadline gets ever nearer and every insurer’s, broker’s and policyholder’s individual efforts collectively add to the total of activity. Perhaps too as the “old year” passed to the new there was a renewed sense of urgency (or an awakening?) that “next year’s to be done” was very much “this year’s to do”. Time of course rests for no man (or busy insurer) and we at BLM have undoubtedly seen an acceleration in requests for support, help and advice.
We have also seen published this year the Airmic Guide to Fair Presentation that adds very substantially to the industry guidance on the subject (and which can be found on the BLM useful links pages together with the LMA and BIBA Guides). Of course the smaller corporates, SMEs and sole traders are not going to need the 180 days that Airmic suggests is appropriate for their members to commence the renewal process with a first meeting with their insurers but it does emphasise that time for implementation is getting short. 180 days before IAD (“Insurance Act Day””) is 15 February.
Whilst there is a lot of activity there remains some areas for concern. It is always going to be the case that some organisations will be further down the track than others and this does not mean that everyone will not finish in time – even if it will be pretty close. Having said that there does seem to be quite a few indications that the acceleration noted above is not too soon. Surveys at the end of last year indicated that there was much still to be done.
Part of the problem does lie with the necessary flexibility of the Act. The commercial market is large, diverse and challenging and a “one size fits all” solution was not an appropriate law to fit the needs of the UK insurance industry or its customers. CIDRA 2012 in that sense was “easy” – no contracting out as an option: comply or die! IA2015 is not compulsory (save for the ban on basis clauses) and contracting out offers flexibility for insurer and insured. The challenge of this flexibility then rests with the endless options as the “new normal” becomes established after 110 years of the Marine Insurance Act.
Our final point for the underwriter or broker who might not have done quite enough by August this year is to look forward to 2018 and the first case on a coverage point before His Honour Mr Justice Lawful. Cross examination is by the well-known Counsel Mr Silk QC. Would you be able to say that every answer is an emphatic “Yes”?
Q. Mr Under-Broker, you wrote this book of business / placed this policy on the basis of the terms appearing at Exhibit 73, page 147?
Q. You are a modern and vibrant insurer / broker offering a 21st century service to your customers?
Q. You wrote the book / placed the policy so on the basis that it complied with the law?
Q. You were satisfied that the wordings were compliant with the law at the time?
Q. If I might draw your attention to clause 17.3: did this clause not appear in policies issued before 12 August 2016 and was compliant with law which was then 110 years old?
Q. Did you consider whether a review of your policy terms might be appropriate to reflect 21st century legislation?
Q. Did you consider whether this clause might be in breach of sections 9, 10, 11 of the new 21st century legislation, namely the Insurance Act 2015, that was in force when this policy was incepted?
Q. Did you consider and apply the transparency provisions of s17?
Q. And if we might now turn to the obligation to pay a claim within a reasonable time imported in to the policy by s13A…….
Me’ lud – I have no further questions.
Written by Terry Renouf, partner, BLM