Insurance Act 2015 (United Kingdom)
The UK statute that in 2016 overhauled the law of business insurance contracts: fair presentation of the risk, proportionate remedies, suspension of warranties, and which governs a large share of the global specialty market.
The Insurance Act 2015, in force since August 12, 2016, modernized English law on non-consumer insurance contracts, inherited largely from a 1906 marine statute. Three reforms form its core. The duty of fair presentation of the risk replaces the old duty to disclose every material fact: the insured must disclose what it knows or ought to know, in a clear and accessible way, and the insurer must ask the questions its expertise suggests. Remedies become proportionate: avoidance now applies only to deliberate or reckless breach; otherwise, the insurer is put back in the position it would have been in, contract declined, contract on other terms or higher premium, and the indemnity is reduced accordingly. Finally, warranties no longer discharge the insurer but suspend cover, and basis of the contract clauses are abolished. The act allows certain rules to be contracted out of by a clear clause, except for consumer insureds. Because a large share of the world's specialty policies and treaties is governed by English law, this statute settles claims well beyond the United Kingdom.
An insured negligently fails to disclose a prior loss. The insurer shows that, had it known, it would have accepted the risk at double the premium. Under the 2015 act it cannot avoid the contract: it pays the 1 million pound claim in the proportion of the premium charged to the premium it would have required, that is 500,000 pounds.
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