The adoption of the Insurance Act 2015 ("the Act") has led to a significant reduction in the number of cases brought before the courts in the United Kingdom. Prior to the adoption of the Act, customers were required to disclose every circumstance that they knew, or ought to have known, could influence an insurer in deciding whether to accept a proposal for insurance and determining the terms and conditions. This placed on customers a strict burden of declaring all information that an insurer might consider material. Insureds were required to act in utmost good faith (as were also insurers) and provide full disclosure of information - even information already held by the insurer - at the risk, in the event of a claim, of having his policy declared null and void or even having his policy cancelled.
The broker had a duty to encourage customers to ovide this information, which would then, as a matter of course, be forwarded to the insurer. The strict obligation placed on insureds led to considerable litigation. The Act rebalanced the situation by repealing the previous legislation and replacing it with a duty for insureds to make a “fair” presentation of the risk to the insurer.
The new Act means that prospective insureds must disclose all material circumstances of which they are aware - or should be aware - and make a disclosure of the risk that is sufficiently precise to enable a prudent insurer to request additional information if necessary. Thanks to this law, an insurer can now avoid an insurance policy only if the insured’s mistake was intentional or if a claim is fraudulent. As a result, it is now more difficult for insurers to deny a claim for non-disclosure or to cancel a policy in the event the insured fails to comply with their obligations.
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