FERMA guide warns that the UK Insurance Act 2015 will affect insurance buyers across Europe

FERMA today publishes a guide for risk managers across Europe on the implications of new legislation that will change the legal framework for commercial insurance in the UK.

Produced jointly with insurance governance specialist Mactavish, the guide – entitled Changes in UK Insurance Law – An Introduction for European Businesses – warns that the UK Insurance Act 2015 will affect buyers across Europe because of the large amount of international insurance and reinsurance business that is placed in the London insurance market.

FERMA president Julia Graham said: “The Act will bring significant additional direct and indirect benefits to businesses that arrange insurance in the UK. However, to get these benefits, European risk managers will need to understand the substance of the reform and adapt their practices in response.”

The law, which comes in next year, is the most important new law for UK commercial insurance in more than a century. It gives buyers valuable extra protection, so insurers will no longer be able to use technicalities or trivial breaches of contract to turn down claims on policies bought in good faith.

At the same time, it places a bigger burden on buyers to present underwriters with accurate information that provides a fair and detailed picture of their organisation’s risk profile.

The guide offers an overview of the legislation and its implications for risk managers, as well as a checklist of issues to consider.

David Hertzell, the former law commissioner responsible for overseeing the new legislation, now a special adviser for Mactavish, says the Act will encourage professionalism in the market. Those buyers who rise to the challenge stand to derive significant benefits in terms of better designed policies and greater certainty that large claims will be paid, he says.

Mactavish chief executive Bruce Hepburn adds: “By compelling businesses to understand their risk in more detail and shifting insurers’ focus towards clarifying and defining coverage, the Act is expected to drive increased innovation in bespoke coverage design. To benefit, however, buyers and their brokers will have to be alert to the implications of the new law. This guide has been written to help them do so.”