2016 – changes to the Insurance market

Without doubt, 2016 will bring significant changes to the UK insurance market. As we begin a new year, the repair and replacement work will continue for those individuals, families and businesses affected by last month’s devastating floods.

The issue of flooding is likely to remain high on the agenda for many associated with insurance. The good news, however, is that in April we should see the implementation of the long-awaited Flood Re scheme.

Flood Re will be in place for 25 years and is designed to:

• enable flood cover to be affordable for those households at highest risk of flooding;

• increase availability and choice of insurers for customers;

• allow time for the Government, local authorities, insurers and communities to become better prepared for flooding;

• create a ‘level playing field’ for new entrants and existing insurers in the UK home insurance market.

It has been estimated that 350,000 homes most at risk of flooding could benefit from the Flood Re-scheme, without which they would undoubtedly struggle to find affordable flood insurance.

Under the scheme, insurers will be able to pass the flood risk element of eligible risks to Flood Re who will charge a fixed premium for each policy based on the property’s council tax band.

This will then allow policyholders to shop around in a more competitive market, knowing that the flood element of the overall risk has been taken care of.

It is important to remember that the scheme will not be available to properties built after 2009 nor for commercial risks, which will remain subject to insurers’ individual underwriting criteria.

August 2016 will see the introduction of the Insurance Act and this will bring about a fundamental change to insurance law in the areas of disclosure, representations and warranties in particular

Under the Act, for commercial insurance risks or – as they are defined – non-consumer insurance contracts, the duty to disclose (without being asked) all material facts is being replaced by the duty to make a fair presentation of the risk.

This can be achieved in one of two ways:

• Disclosing all material facts which they know, or ought to know – this reflects the current situation – but failing that

• Providing sufficient information to put an insurer on notice that it needs to make further enquiries about potentially material circumstances.

Unfortunately, space does not allow us to detail the specific requirements under the Insurance Act but both brokers and insurers will need to consider the effect this legislation will have on their individual businesses.

rradar is more than happy to provide training on this important topic. More information can be obtained by contacting us.

Finally, throughout 2016 policyholders who renew or take out an AXA management liability policy (MLP) will benefit from enhanced cover which includes:

• £25,000 pursuit cover for contract disputes and debt recovery.

• £100,000 data protection breach customer/supplier contact cover.

• £25,000 negative social media and crisis public relations costs.

• £25,000 circumstance investigation/mitigation costs.

• Reduced excess levels.

• Deprivation of assets.

• Non-indemnifiable additional limit for directors.

• Employment civil fines.

• Option to extend employee dishonesty cover to full crime.

With unlimited advice and guidance provided by rradar via the Advice Resource Centre, the Axa MLP remains a unique and groundbreaking product.

How rradar can help:

For more information about how rradar can help, please visit our Broker services, or speak to Alan Hornby our Broker engagement professional for available training services.

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