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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+
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EXCELLENCE – articulates our existing best practice
ensuring good customer outcomes are embedded
into our organisation and clear to our customers.
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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contract law was out of date and no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.
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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.
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