Insurance legislation that reforms the historical rules governing contracts between businesses and insurers has become law.
The Insurance Bill will benefit businesses and insurers by:
- increasing transparency
- simplifying and clarifying rules.
The government estimates that businesses will save around £100 million over the next 10 years through lower transaction and court costs.
The legislation reforms 3 main areas of insurance contract law:
- Disclosing risk: businesses must now give a 'fair presentation' of the risk when entering into an insurance contract
- Remedies: insurers now have clear and defined actions to take when a policyholder makes a fraudulent claim
- Warranties: the insurers' liability will be suspended, not cancelled, when the policyholder's warranty is breached.
James Dalton, director of general insurance at the Association of British Insurers, said:
"We welcome the modernisation and rationalisation of insurance contract law, undertaken by the Law Commission and HM Treasury working with the industry and other stakeholders."
Economic Secretary to the Treasury, Andrea Leadsom said:
"We want to make sure that the industry continues to grow and provide better services to customers, which is why we have brought insurance contract law into the 21st century. The Insurance Bill that has become law today will ensure that Britain’s insurers can succeed in the future and allow business customers to take advantage of lower costs."