Graham Terrell, Deputy Chair of the BIBA casualty and accident committee, and Technician at JLT Specialty, explains how buyers benefit from the Insurance Bill.
Q: What advice would you give companies about the new bill?
The precise scope of responsibility that the new ‘Duty to Provide a Fair Presentation of the Risk’ will place on insurers and insurance buyers is currently unclear.
So, prepare with your brokers for the detailed, targeted risk information questions that insurers are likely to ask, and ensure that this is in a clear and detailed enough form to comply with the duty to make a ‘fair presentation of the risk’.
Up until August 2016, when the law comes into effect, push for such measures as innocent nondisclosure clauses, removal of basis clauses and suspensive/limited application of warranties to be included by insurers in your policies.
Currently, a breach of warranty that has nothing to do with the claim can, legally, lead to the claim being avoided by the insurer. This is absolutely unfair so we have called for the clause in its reworded version to be reinstated.
Some regard the current position as being very clear and straightforward: any breach of warranty leads to an automatic right to avoid a claim. Introducing the issue of causation inevitably brings the possibility of arguments on both sides about what caused the breach and to what extent. However, we think this possibility is worth accepting for the sake of simple commercial fairness.
Q: What if the final law does not address all buyers’ concerns?
I think Airmic, the UK’s risk and insurance managers association, and BIBA have a strong commercial bargaining position to try to push for as many positive amendments as possible. Buyers are in a good position to negotiate and insurers know that an amount of commercial goodwill will be obtained.