BIBA launching Insurance Act guidance for brokers and insureds with support of Airmic

The 2005 Insurance Act, which will come into force on 12 August, 2016, will introduce new duties of disclosure on insurance buyers, such as a requirement to offer insurers a fair presentation of risk. Brokers, by extension, will need to assist their clients in meeting obligations under the Act. To help members navigate the new legislation, BIBA is to publish a guide to the Insurance Act at its annual conference in Manchester next week. The guide was written in association with Mactavish and is endorsed by the London & International Insurance Brokers' Association (LIIBA), the Chartered Insurance Institute, Airmic and insurers Aviva and QBE. The Act will bring about important changes to commercial broker practices throughout the UK, according to BIBA executive director Graeme Trudgill. In particular it raises new considerations about reasonable search and fair presentation.hideMany insurance buyers will look to their brokers to help them understand the Act and comply with its new duties of disclosure, such as the requirement to conduct a 'reasonable search' for relevant information. "Brokers can use this guide to help bring their staff up to speed on the operational changes they may need to consider," according to Mr Trudgill. "BIBA has also written it from a customer perspective so that brokers can help support customers in understanding their new duties," he added. BIBA's guide sets out how insurance contract law will change under the Act and the areas that insureds should start to think through in advance of their first renewal under the new regime. It also suggests questions that brokers will need to consider within their own organisations and those relating to their relationships with both clients and insurers. Airmic sat on the steering group that oversaw the development of the BIBA guide and supports the key messages in the guide, according to a spokesperson for the association. In particular, Airmic welcomed the guide's recommendation that insureds need to leave more time for renewals or risk failing to comply with their statutory duties and miss the opportunity to benefit from additional defences afforded them under the new law. It also supports BIBA's approach to warranties, noting that while new remedies for breach of warranty are an improvement on the current law, there still is significant risk that cover will be compromised if insureds fail to provide the information that insurers need. According to Mr Trudgill, the BIBA guide is only a starting point. "I see this guide as an important first step towards all this by setting out where policyholders and brokers may want to focus ahead of August 2016," he said. "The guide helps to summarise what is coming, what you need to know and how to start preparing for it. However, the approach by insurers will become clearer as we get closer to the August 2016 implementation date and after that case law will inevitably develop," he said. BIBA will issue further guidance as and when there is progress, he added. "The Insurance Act 2015 modernises and clarifies the law, providing a framework for insurance placement in the 21st century. However, it will now be up to all market participants to work together to realise the full substance of the reform," said Mr Trudgill. Airmic also plans to launch specific guidance for its members. Insurer bodies, such as the Lloyd's Market Association, will produce guidance for underwriters. While BIBA's guidance is predominantly geared towards brokers, the Airmic guidance will outline practical steps its members can pursue to take advantage of the Act before August 2016. It will also provide practical guidance to ensure members are compliant with the Act themselves. Airmic's first piece of guidance, which will be released in advance of its conference in June, has been prepared by law firm Herbert Smith Freehills. It includes an endorsement for policyholders who wish to amend their policies to benefit from the Act before August 2016. The association plans further guidance toward the end of the year. That will be a best practice guide for Airmic members on achieving 'fair presentation of the risk' during the disclosure process. It also plans an online resource for members on the Insurance Act 2015, which will consolidate all of the information available from Airmic sponsors and will include BIBA's guidance.

BIBA launching Insurance Act guidance for brokers and insureds with support of Airmic

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