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What are the disclosure duties under the Insurance Act 2015 (IA 2015)? Mark Pring, head of insurance at Addleshaw Goddard, Martin Mankabady, partner at Clyde & Co, and Nick Smith, senior manager of commercial customer propositions at Aviva, explore the upcoming changes and what they mean for clients and insurers.
How are the disclosure duties structured in the Insurance Act 2015?
Martin Mankabady (MM): Regarding the new duty of fair presentation, the change introduced by IA 2015 in respect of disclosure in relation to non-consumer insurance contracts is one of the key changes introduced overall by the new legislation.
There is now a new duty on an insured to make a fair presentation of a risk before a contract of insurance is entered into. This duty requires the following:
In connection with this duty, every material representation as to a matter of fact must be substantially correct, and every material representation as to a matter of expectation or belief must be made in good faith. This new duty replaces the previous ‘utmost good faith’ duty set out in the Marine Insurance Act 1906 (MIA 1906).
Mark Pring (MP): The new Act provides, in principle, a clearer framework for what is identified as the ‘duty of fair presentation’. The relationship between insured and insurer is still to be characterised above all by the scope of the insured’s disclosure obligations at the time the risk is presented (or renewed), but IA 2015 expressly seeks to create a greater degree of ‘balance’ based on the knowledge of the respective parties.
To that end, the duty of fair presentation requires, in the first instance, the disclosure of every ‘material circumstance’ which the insured knows or ought to know. (A circumstance is any communication made to or information received by the
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