“If you start from the place, as we do, that insurance exists to pay valid claims, the Act formalises many of the things that we have been doing at Markel for some time. We have always taken a pragmatic and practical approach to claims and so, for example, typically we don’t hide behind basis of contract clauses to avoid paying claims. Our claims philosophy is all about looking after the insured and that chimes closely with the intentions of the Act,” says Gabby.
Key elements of the Act are that a risk should be presented fairly and that the insurer should have undertaken a reasonable level of research to understand and evaluate the risk.
James commented: “While there are opportunities to contract out of the Act, we do not expect to make use of these except in some specialised areas of business. If we do, we’ll be very explicit that’s what we are doing.”
As a result of the Act, there has been a lot of work on wordings to make them simpler and more understandable, as well as fulfilling the obligations of the Act.
“We have been working on our wordings for many months to make sure we’re compliant when the Act comes into force. Where we have been developing new products, such as in cyber and fintech, we’ve been considering the requirements of the Act long before we needed to,” says James.
“The Act is good news for the clients and brings London into the 21st century. It will reduce the potential for policy coverage disputes and bring us more in line with other countries around the world,” he adds.
A new element on the claims side is the idea of proportionate remedies, where a risk hasn’t been fairly presented. Broadly, these mean that in cases where the misrepresentation was not deliberate or reckless, that the obligation on the insurer will be adjusted to reflect the differing terms or level of premium the insurer would have demanded had they been given the right level of information. Gabby added: “We don’t yet know how these remedies will work in practice, but we do know that, in line with our claims philosophy, we’ll think very carefully before making use of them.”