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The Insurance Act—What Businesses Need to Know

April 18, 2015

The Insurance Act, a piece of legislation designed to modernise and support the growth of Britain’s insurance industry, received Royal Assent on 12 February 2015, thus making it an Act of Parliament (law).

The Act ushers in a more modern regime for the industry by updating the 100-year-old regulations governing contracts between businesses and insurers. The government believes that updating the regulations will lend transparency to the industry and lower the number of legal disputes, better equipping UK insurers to survive against global competitors who have already adopted more modern regimes for governing insurance.

The Act contains three main areas of reform: disclosure and misrepresentation in business and other non-consumer insurance contracts, warranties, and remedies for fraudulent claims.

What the Reforms Mean for Businesses

The three main reforms should benefit both the insurance industry and businesses throughout the United Kingdom—the government estimates businesses will benefit by about £100 million over the next ten years through lower litigation and transaction costs. The litany of reforms proposed in the Act fall into the following three categories:

 

Next Steps for Businesses

The Act’s reforms will go into effect in August 2016, extending to every insurance policy written in the United Kingdom (with certain exceptions). Be aware of how the reforms will affect your current contracts and what changes you need to make in the interim to stay prepared, compliant and successful.

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