LAW COMMISSION REFORMS ZURICH INSURANCE IS FULLY COMMITTED TO THE IMPLEMENTATION OF THE NEW INSURANCE ACT – ADOPTING THE SPIRIT AND FAST-TRACKING THE LAW COMMISSION’S PROPOSALS ACROSS OUR BUSINESS. WHY ZURICH INSURANCE – we have supported the principles of the Commission throughout this programme of reform to drive to enshrine the changes in law for non-life commercial contracts as well as consumers. EQUITY – implementing these proposals will create a much needed level playing field in the industry – and create increased certainty in the promises made in insurance contracts. A+ _020HN_173000337.indd 1 EXCELLENCE – articulates our existing best practice ensuring good customer outcomes are embedded into our organisation and clear to our customers. 14/05/2015 11:11 LAW COMMISSION REFORMS WHAT IT MEANS FOR BROKERS Removing ambiguity and no hesitation in recommending us to your clients – can be sure of our services and commitment to a fair, honest and progressive approach to claims settlement. ZURICH | INSURANCE | EQUITY | EXCELLENCE WHY The UK’s Commercial insurance contracts are based on an Act that came into effect more than 100 years ago. The Marine Insurance Act 1906 Act imposed a duty to disclose every material circumstance which would influence the ‘prudent underwriter’ potentially giving insurers the opportunity to decline claims where there may be no related material impact, for example intruder alarm failings on a flood claim (although this is rarely used in todays market it does bring uncertainty to the contract). So much has changed during that time and the need to modernise rules governing insurance contracts between businesses and insurers essential. WHAT IT MEANS FOR CUSTOMERS WHAT IT MEANS TO ZURICH Our underwriting and claims processes were already designed around creating good outcomes for our customers and we see this as an opportunity to promote this fair claims settlement approach to the market. “Insurance underpins a healthy and prosperous society. It enables businesses and individuals to protect themselves against risk. But insurance contract law was out of date and no longer reflected the realities of today’s commercial practices. The provisions of the Insurance Act 2015 will modernise the law; balance more fairly the interests of insurers and buyers; and provide a framework for an effective, competitive and trusted business insurance market” Stephen Lewis, Law Commissioner WHAT CHANGES ARE WE IMPLEMENTING? Change 1: Non deliberate or non-reckless non-disclosure/misrepresentation Change 2: Deliberate or reckless non-disclosure/ misrepresentation – Fraud There remains a responsibility for presentation of risk by the customer and this is explained further in the Act. Prior to the Act becoming effective, we will be operating as follows: ✔ Where non-disclosure or misrepresentation is deliberate or reckless, we have the right to avoid the policy and retain the premium. ✔ Where we would have charged a higher premium, we will charge the insured the additional premium straight away when the non-disclosure or misrepresentation becomes known to Zurich (not offsetting at the claims stage), with customer agreement. ✔ Where we would NOT have written the risk, or we would have written with imposed terms: – If we would not have written the cover, we can treat the insurance as if coverage was never attached but must return the premium. – If we would have imposed terms, we can treat this insurance as if it had been entered into on those different terms (from the date of the breach). Change 3: Warranties ✔ We will aim to remove warranties from our policies and replace with Conditions Precedent to Liability and Conditions. ✔ Whilst we envisage most policies will be ‘warranty free’, we may apply by exception. In these instances we should explain the rationale to the broker or customer. Where warranties are used and are not complied with by the insured, it will only suspend cover and not terminate the policy in accordance with the Insurance Act. Change 4: Basis Clause How will we be implementing these changes? We started implementing the principles of the recommendations in 2014. Due to the scale of the changes required we will be making these changes on a phased approach starting in 2015. During this implementation phase we will operate in accordance with the key parts of the Act. In practice this means: ✔ We will treat the basis of contract clause as having no effect in all documentation. ✔ We will not void the policy or refuse indemnity where the breach of specific risk condition is not related to the risk of loss. ✔ In the event of misrepresentation or non-disclosure we will act as shown above. This will be removed from our wordings as such clauses are being abolished. zurich.co.uk/business or insider.zurich.co.uk @ZurichInsider Speak to your usual Zurich contact Zurich Insurance plc A public limited company incorporated in Ireland. Registration No. 13460. Registered Office: Zurich House, Ballsbridge Park, Dublin 4, Ireland. UK Branch registered in England and Wales Registration No. BR7985. UK Branch Head Office: The Zurich Centre, 3000 Parkway, Whiteley, Fareham, Hampshire PO15 7JZ. Zurich Insurance plc is authorised by the Central Bank of Ireland and subject to limited regulation by the Financial Conduct Authority. Details about the extent of our regulation by the Financial Conduct Authority are available from us on request. These details can be checked on the FCA’s Financial Services Register via their website www.fca.org.uk or by contacting them on 0800 111 6768. Our FCA Firm Reference Number is 203093. © Copyright – Zurich Insurance plc 2014. All rights reserved. Reproduction, adaptation, or translation without prior written permission is prohibited except as allowed under copyright laws. _020HN_173000337.indd 2 UKGI660 (173000337) (05/15) ZCL Confidence in our ‘Fair’ settlement of claims and certainty that the policy will perform as expected. The benefit of Zurich insight and ‘good customer outcomes’ approach. 14/05/2015 11:11
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