Yesterday, the Insurance Bill passed its Report Stage in the House of Lords, with Peers approving technical amendments brought forward by Government. These are likely to be the final changes before the Bill goes to the Commons after what should be a very short Third (and final) Reading in the Lords on 15 January.
We expect the legislation will be readily and quickly adopted in the Commons because the Lords has conducted an extremely thorough scrutiny of its provisions. A full timeline and more information on the passage of the Bill to date can be found here.
The amendments approved yesterday are summarised below.
- No changes to “the duty of fair presentation of the risk” or to the remedies available if the insured does not comply with this duty.
- Confirmation that what the insured “ought to know” - and should therefore disclose - includes information held by its agent and by anyone to be covered by the policy.
- The introduction of a new clause, further restricting reliance on breach of warranties. The new clause is intended to prevent an insurer from relying on a commercial insured’s non-compliance with a warranty as grounds for avoiding liability for a claim for loss of an entirely different kind than that envisaged by the warranty.
- Clarification that remedies for a fraudulent claim made by a member of a group insurance scheme will apply not only to consumer but also to commercial group policies.
The Commons' debates on the Bill are very unlikely indeed to result in any noteworthy changes. Insurers, brokers and policyholders may therefore now look at detailed consideration of policy wordings and placement processes in light of the new legislation.
A Time for Change
The current law on commercial insurance is founded on a 1906 statute which itself codified case law from the eighteenth and nineteenth centuries. The Insurance Bill is designed to change the law to reflect modern business relationships and to rebalance rights and remedies when things go wrong. Its provisions have been developed by the Law Commission over the past few years as a result of extensive consultations in which BLM took part fully. Our lawyers are also working with industry bodies such as the CII and hosting events and seminars to address the impact of the Bill and are committed to doing so during the process of implementation.
We are pleased that the former Law Commissioner for Commercial and Common Law, David Hertzell joined BLM this year, as a consultant. David has been the leading force on the implementation of commercial insurance law reform and is working with BLM partners to inform and prepare our customers in advance of the implementation of the Insurance Bill.
We have published a short guide to the Bill which, together with the points above, sets out some of the key points in a brief and accessible format. We hope you find it useful, relevant and thought-provoking.
Please contact us if you would like further details.