Overview

This Insurance Bill aims to modernize UK insurance law, primarily focusing on non-consumer insurance contracts. Key changes include clarifying the duty of fair presentation, reforming warranties, and addressing fraudulent claims. It also amends the Third Parties (Rights Against Insurers) Act 2010 to expand the definition of "relevant person."

Description

Duty of Fair Presentation

The bill introduces a new "duty of fair presentation" for non-consumer insurance contracts, requiring insureds to disclose all material circumstances to the insurer. The definition of "material circumstance" is clarified. The bill outlines the knowledge requirements for both insureds and insurers, specifying who within an organisation is deemed to possess knowledge, and details the remedies available to insurers for breaches of this duty.

Warranties and Other Terms

The bill abolishes the rule that breach of warranty automatically discharges the insurer's liability. Instead, it limits the insurer's liability only to losses occurring after the breach and before its remedy. It also prevents insurers from using non-compliance with terms not directly related to the loss to avoid liability if the non-compliance didn't increase the risk.

Fraudulent Claims

The bill clarifies the insurer's remedies for fraudulent claims, allowing them to avoid the contract, recover payments, and refuse future claims without returning premiums. This also covers group insurance where a fraudulent claim is made by one member.

Good Faith and Contracting Out

The bill abolishes the "utmost good faith" doctrine for insurance contracts, replacing it with the new duty of fair presentation and limitations set out in the bill. It restricts the ability of insurers to contract out of the bill's provisions, particularly for consumer contracts.

Third Parties (Rights Against Insurers) Act 2010 Amendments

The bill gives the Secretary of State power to modify the definition of "relevant person" in the 2010 Act, particularly in cases of corporate or individual insolvency. It expands situations where third party rights are transferred.

Government Spending

The bill doesn't directly specify government spending increases or decreases. The impact is mainly regulatory, affecting the legal framework and processes related to insurance contracts and claims.

Groups Affected

• Insurers: The bill significantly impacts insurers' rights and liabilities, particularly regarding claims and contract avoidance.
• Insureds (both consumers and non-consumers): The bill clarifies their obligations related to disclosure and representation, potentially changing their rights and responsibilities.
• Third parties: Amendments to the Third Parties (Rights Against Insurers) Act 2010 could affect third-party claims in cases of insolvency or other issues.
• Legal Professionals: Changes to the legal framework will necessitate adjustments to their practices.

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