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All change as Insurance act comes into force today

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  • Topics:
    • Claims & Losses
    • Regulation & Compliance

The British Insurance Brokers’ Association (BIBA) has welcomed the Insurance Act 2015 which is implemented today. The Act is designed to increase professionalism in the placing of commercial insurance and aims to provide fairer outcomes for customers but will also bring new considerations for brokers and businesses when arranging insurance...



The Act will affect every business insurance policy placed, renewed or amended after today and is the biggest change to insurance law in more than 100 years. It will modernise insurance law and aims to make seeking payment from insurers simpler and fairer in the event of a claim.


The Act includes many positive developments that BIBA lobbied for, such as outlawing the ‘basis of the contract’ clauses which previously turned information provided by customers into warranties so that any change (even trivial or immaterial) could have led to termination of the contract.


BIBA also succeeded in lobbying for ‘terms not relevant to the actual loss’ to be outlawed meaning, for example, that if a policyholder has to comply with a warranty to turn on a burglar alarm but a claim is caused by a flood, then the insurer will accept the claim.


The Act will bring new requirements for customers, which could impact brokers, such as the ‘duty of fair presentation’ and the obligation of ‘reasonable search’. BIBA has worked with leading experts on insurance governance, Mactavish, to publish a number of guides for its members and their customers to assist with its implementation.


Steve White, BIBA’s Chief Executive, said: “We are delighted that the Insurance Act is now in force.  In the lead up to today, our members asked for guidance and I am pleased that we have been able to provide a number of publications to support them. We know there will not be absolute certainty until some of the Act’s provisions have been tested in court, but armed with all of the information available, our members will be able to advise customers on the provisions of the Act.”


Although the Act is welcomed and will bring benefits, BIBA is calling on insurers who may choose to ‘contract out’ of the Act or parts of it, to be clear about this and bring any disadvantageous terms to the attention of brokers.


Steve added: “The industry has never experienced such a massive change in the legislation governing our practices, and we would like brokers and insurers to engage with each other in a way which adopts the Act’s requirements, to create a fair and transparent approach for all. We have provided a toolkit to help firms in our new implementation guide.”


Bruce Hepburn, Mactavish Chief Executive Officer, commented: “With the emphasis on a more professional market, the new law is a great opportunity for brokers to add value by providing crucial client advice and for policyholders to focus on the quality of what they have purchased rather than price alone.  With the implementation of the Act, the ideal scenario would be for participants to be not only compliant but to also reap the intended benefits of the new regime.”


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