Insurance Bill becomes law

The Insurance Bill today received Royal Assent meaning fundamental reforms to the rules governing commercial insurance are now officially law. 

Airmic will issue a briefing note to its members next week. Although there is an 18-month transition period from today, the association has urged the market to act swiftly to implement the reforms.  As well as outlining the key changes to the law, Airmic is working with Herbert Smith Freehills to develop a suggested clause which will allow insurers and policyholders to contract with immediate effect on the basis that the Act is in force (without waiting 18-months) should they wish to do.

The passing of the law was widely expected this week after being unanimously approved in parliament on 4 February and marks the culmination of years of lobbying and negotiations.  Airmic has been closely involved in the process and has strongly welcomed the outcome, hailing it a significant moment for both policyholders and the wider UK and London insurance markets. 

Members wanting to hear more about what the changes mean for them and what they should be doing next can participate in an Airmic Live call on 25 February, where experts from Herbert Smith Freehills, Zurich and JLT as well as former law commissioner David Hertzell will be discussing the Act and taking questions from members. There will also be a seminar at the annual conference in June when Herbert Smith Freehills will be advising members on implementing the changes.  

The 2015 Insurance Act has replaced the Marine Insurance Act, the century-old measure that has provided the framework for all commercial insurance purchased in the UK since 1906. The new law tackles disclosure rules, which Airmic has previously criticised as “draconian” because of the scope they give insurers to avoid paying apparently legitimate claims. In particular it provides proportionate remedies for innocent non-disclosure and eliminates basis clauses. It also provides protections for policyholders against the inappropriate use of warranty breaches to avoid policies. 

Airmic believes the changes will not only bring the UK up-to-date with modern business but will improve the UK market's competitiveness internationally.