Risk managers at European companies need to urgently familiarise themselves with forthcoming changes to UK insurance contract law, according to Ferma.
Commercial insurance contracts signed under English law from 12 August will be subject to the Insurance Act 2015. This new contract law addresses a number of unpopular insurer practices, but places new duties of disclosure and fair presentation of risk on buyers.
Continental European risk managers are largely unaware of the UK Insurance Act, the duties it will place on their companies and the fast-approaching 12 August implementation date, according to Jo Willaert, president of Ferma.
“There appears to be little reaction to the UK Insurance Act in the continental European market. The impression I have is that risk managers in Europe do not yet realise that the UK Insurance Act will have an impact on their business,” said Mr Willaert, who is also board member at the Belgium Risk Management Association (Belrim).
Mr Willaert urges risk managers to be proactive rather than wait for brokers to inform them about the Act. While brokers have a role to play in advising clients, the ultimate responsibility falls on insurance buyers, he said.
“Brokers will probably take the lead, but they are not bound to do so. Legally, the Act is our problem as insurance buyers and is for us to find out about,” said Mr Willaert.
According to Bruce Hepburn, chief executive of insurance governance adviser Mactavish: “European companies buying insurance in the London market and other jurisdictions under English law have not woken up to the Act as quickly as they should.”
Many non-UK companies, including those in Europe, will enter into insurance contracts this year that do not fully comply with the Insurance Act and will be at a disadvantage when it comes to a claim, he argued.
He also believes that such companies will be the innocent targets of inevitable litigation that will follow the Act. Under the UK’s common law system, which is less prescriptive than the civil code system favoured by most European countries, laws are tested and interpreted by the courts.
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