Years of detailed consultations and Parliamentary scrutiny culminated in the first change to the law relating to commercial insurance in more than a century as the Insurance Bill received Royal Assent yesterday.
The Insurance Act 2015 is designed to change the law to reflect modern business relationships and to rebalance rights and remedies when things go wrong. Its provisions were developed by the Law Commission over several years.
The current law on commercial insurance is founded on a 1906 statute which itself codified case law from the eighteenth and nineteenth centuries. The market is writing a more diverse spread of risks than ever before. The nature and types of risks have changed and many market participants have been exposed to developments in other jurisdictions, many of which seek to compete for UK business.
What seemed certain and solid even a few years ago began to look old fashioned, quaint and uncompetitive.
The Act allows an 18 month implementation period. However that is merely one full underwriting cycle away and the clock is now counting down to 12 August 2016.
To avoid legal challenges insurers, brokers and policyholders need to prepare now. Reviewing wordings, updating IT systems, considering practices and procedures is not an overnight task. The challenge is greater because of the diversity of policyholder to which the Insurance Act 2015 will apply: from microbusiness to global multinational. Those who are well prepared will undoubtedly benefit.
We have met with many of you during the course of the reform process and will continue to assist all of our clients as they prepare for the changes required by Insurance Act 2015. We do consider that the Act will provide significant opportunities for the insurance industry to meet the needs of its customers in the 21st Century and we look forward to your views, comments and questions.
For all the latest Insurance Act information, please see our dedicated web page - www.blmlaw.com/timeforchange