Few will remember EU Referendum day as marking the 50 day countdown to commencement of the Insurance Act nor that it marks 497 days of preparation since the Insurance Bill was enacted on 12 February 2015. The short time before the Act will apply to policies incepted, renewed or varied is giving rise to a flurry of activity as the focus now moves on to the practicalities of the Act.
It is inevitable that the legislation can only deal with high level principles given the variety and complexity of commercial cover available and required. And because the Act allows contracting out (save in a couple of respects) there is the option to offer bespoke covers for particular risks. Inevitably there is much discussion around policy details and process as IA-Day approaches on 12 August.
There has been much good work in the 16 1/2 months since February 2015 (see the LMA guides and model wordings on our useful links website section) and the BIBA and Airmic Conferences have acted as catalysts for various insurer guides and conversations. Some markets are good and ready with carefully prepared positions and products: others are perhaps not quite where they wish to be and find themselves fending off customer and broker questions. It is certainly now getting to be rather late in the day to be considering some of the process changes that the Insurance Act demands and one would expect that most of those changes should, by now have been considered and implemented.
As far as training is concerned we would advise: “don’t panic!” There are certainly some new issues to take on board and some new remedies but the Act was, save for proportionate remedies, evolutionary rather than revolutionary, reflecting a consensus of market “best practice”.
This is most definitely not to say that there is nothing to do. Bringing 100 year old law up to date to reflect the modern world does require a focus on practice and process, changes that ought to have been considered and implemented by now. However many fundamental principles remain the same and so there is no need to throw the baby out with the insurance policy: a material circumstance remains a material circumstance, a warranty and a condition precedent remains a condition precedent. Some revision and re-learning is of course necessary but certainly no need to start from scratch.
In devising a training programme we suggest that it should be designed around three key stages
- Firstly: know the law and learn about the Act
- Secondly, know the policies – is there any contracting out?
- Thirdly – know your client and his/her/its needs and match those to the policies to be issued. Get those three “golden rules” right (and evidence that you did it) and you will not go far wrong.
Written by Terry Renouf, partner, BLM