Businesses in Harrogate need to be aware of the new way in which the law now views the respective obligations of an insured business and its insurer and a broker based in Harrogate is all geared up to help them understand what is a significant shift in focus.
Whilst insurers have previously been able to turn down business claims when an insured business has not disclosed material facts, even when the insurer has not specifically asked for this information. This “Duty of Disclosure” no longer exists, as from August 12 2016.
A new Insurance Act 2016, has brought commercial insurance in England and Wales into the modern world, replacing the previous legislation, which was based on the Marine Insurance Act of 1906.
A “Duty of Fair Presentation” is now the principle on which contracts between a commercial enterprise and an insurer are based. This requires a business to make their insurer aware of all material circumstances that they ‘ought to know about’, given their running of the business. If they don’t know certain things, they should make the insurer aware of this, so that the insurer can seek out the information.
The insurer, or insurance broker, now needs to be more pro-active in collating the information required to source a insurance quote and arrange cover. The onus is now more on them is to gather the required information, in conjunction with the business’s management.
This new law is much less draconian in its treatment of businesses. Innocent mistakes with regard to the information presented may now not be automatically punished with a refusal to pay a claim.
Similarly, there is more flexibility in relation to the warranties built into insurance contracts and claims may not be refused just because the terms of the warranty were not followed to the letter.
However, there is still a large responsibility on the part of business owners, as insurance broker David Bulmer, of David R Bulmer Associates, said: “Businesses must present the information the law expects them to know, as part of their running of the business.
“They may need to update internal systems, to ensure they provide this information as part of the insurance process, systematically document all heads of information required and nominate managers within the business who need to collate it.
“They must also present information in a reasonable state and cannot expect the insurer to sift through piles of documents and extract the information themselves. This law is all about transparency and, to achieve that, both parties need to play their part and have a dialogue.”
Insurance brokers need to be the party encouraging this dialogue and potentially have a greater role to play in the marrying up of business and insurer than ever before, particularly as some businesses may fall short of being able to provide the information that is deemed being “what they ought to know”.
David R Bulmer Associates is already hitting the ground running in this regard. Whilst it is a local brokerage providing insurance protection and risk management services to a wide variety of businesses, it is also part of the Gauntlet Group’s network of Appointed Representatives and can call on Gauntlet’s resources to make its operation as holistic and on-point as possible.
Gauntlet has created a tool that takes the business owner through a process that prompts them to talk about the different aspects to the business that may need mentioning, or insuring under separate cover.
Gauntlet has also commissioned a short video that explains the change of emphasis that accompanies the new Insurance Act, which can be viewed at www.gauntletgroup.com
“Businesses still cannot deliberately withhold information, but there are some fundamental and tangible changes to the way in which a business and its insurer will now form their insurance contract,” said David.
“We are geared up, as a broker, to talk through all of these, by meeting clients face to face.
“We are also ready to take businesses through a complete review of their business, which will help them to fulfil their new Duty of Presentation when buying or renewing their commercial insurance.
“We feel this will be of huge benefit to our customers, as well an ensuring that we get them the best cover, at the best price, thanks to having access to all insurance markets through our broking team at Gauntlet Group.”