Law Reform update
In last month’s Loop we introduced our report into Law Reform published in association with Mactavish, detailing the proposed changes to the legal framework governing business insurance in the UK.
The reform Bill has now been submitted to Parliament for accelerated passage via a special procedure reserved for Bills authored by the Law Commissions that are broadly uncontroversial. The first two House of Lords readings took place in July, and if the Bill is adopted it will most likely become law in late 2016 as we expect there to be an 18 month bedding in period.
However there were two important changes to the final Bill, where parts were removed from the proposed legislation pending further review. Although these may be re-introduced in some form in future, for now the legislation proceeds in amended form without them.
The following two components of the originally proposed reform Bill have been removed:
1. ‘Terms relevant to particular descriptions of loss’: concerning the breach of warranty or other condition designed to reduce risk of a particular type of loss, this clause stipulated that following breach insurer liability should only be excluded for losses of the same type and at the time/ place concerned.
2. ‘Implied term about payment’: introducing by default into every contract of commercial insurance a requirement that the insurer should make payment of sums due within a reasonable time, with potential penalties for the insurer if they fail to do so.
We supported the original Bill in full, including the sections above which will now be subject to further review. This was because we understand the benefits of the Bill were intended to bring to clients and insurers, and also because these principles are in line with our approach and the protocols we have in place to ensure our clients’ claims are resolved as swiftly and fairly as possible.
Whilst we continue to support the full aims of the original clauses we feel the most urgent priority is that the bulk of the reforms are passed, to bring this antiquated area of law further into line with the needs of the modern business world and insurance industry. The amended Bill remains a huge step forward to achieve this, and to support the wider improvements to disclosure, contracts and placement processes necessary to deliver the most reliable insurance protection to UK businesses.
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