Broker Bulletin No. 3 - Insurance Act 2015

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Following a joint review of the insurance policy placements with QBE Insurance (Europe) Limited (QBE) the following policies will be subject to the changes outlined below, relevant to the Insurance Act 2015. In summary, the key changes are:

1. Material Changes

Going forward the insured must notify QBE as soon as reasonably practical of any material changes. You will recall this was previously within 30 days of the change.

2. Remedies for breach of the duty of fair presentation

Where an insured breaches their duty of fair presentation, then assuming the breach is not deliberate or reckless, and the contract is a contract of insurance which QBE would normally have entered into, then QBE reserve the right to apply one or more of the following:

(i) enter the contract on different terms (other than terms relating to the premium),
(ii) charge a higher premium, effective from the effective date of the variation,
(iii) where the premium has been reduced but the risk would not normally have attracted the reduction QBE will require the insured to reimburse QBE a sum equal to any reduction in premium.

Any claim under the policy will be subject to the policy’s usual terms, conditions and exceptions, and of course each policy should be read as a standalone contract.

The changes will take place with effect from 1st June 2017 renewal cycle and be made on a renewal by renewal basis through to 31st May 2018.

The relevant polices affected are:

a) Employers and Public Liability
b) Officials’ Indemnity
c) Professional Indemnity
d) Environmental Covers
e) Directors & Officers
f) Medical Malpractice
g) Fidelity Guarantee/Crime
h) Motor

Below is an example of the policy endorsement which will apply. This example relates to Employers and Public Liability, but would be similar for other covers.

Endorsement 008 – Condition: Insurance Act ‘Contracting In’ Endorsement

The clauses below are added to and form part of the General terms and conditions to this policy.

1. Basis of contract

Any reference to ‘basis of the contract’ in this policy or in the proposal form (if any) is of no effect.

2. Duty of fair presentation

The insured must make a fair presentation of the risk (as set out in the Insurance Act 2015 or successor or amending legislation) in proposing for, or proposing to vary, this insurance.

3. Remedies for breach of the duty of fair presentation – proposing for this insurance

If the insured or anyone acting on its behalf breaches the insured’s duty of fair presentation then the insurer’s remedies shall be as follows:

(a) if such breach is deliberate or reckless, the insurer may:
(i) treat this policy as having been terminated from its inception; and
(ii) retain the premium;

(b) if such breach is not deliberate or reckless and the insurer would not have entered into this policy but for the breach, the insurer may by notice to the insured treat this policy as having been terminated from its inception in which case the insurer shall return the premium; and

(c) in all other cases if, but for the said breach, the insurer would have entered into this policy but:
(i) on different terms (other than terms relating to the premium), the insurer may require that this policy is treated as if it had been entered into on those different terms from the outset; or

(b) would have charged a higher premium, the insurer may charge such higher premium, effective from inception, and the insured shall pay such higher premium no later than fourteen (14) days after receiving the insurer’s written notice that such higher premium is payable.

4. Material changes during the policy period

4.1 The insured must notify the insurer as
soon as reasonably practical of any material change to the insured, its business or the risks insured if indemnity under this insurance is sought in relation to any such change.

4.2 The insurer shall not indemnify the insured for any liability arising out of a material change for which indemnity would otherwise have been available under this insurance unless the insurer has provided valid confirmation of cover, whether by an express term of this policy, endorsement, written confirmation or otherwise.

5. Remedies for breach of the duty of fair presentation – variation

If the insured or anyone acting on its behalf breaches the insured’s duty of fair presentation in relation to a variation of this policy, the insurer’s remedies shall be as follows:

(a) if such breach is deliberate or reckless, the insurer may:
(i) by notice to the insured treat this policy as having been terminated from the time when the variation was concluded; and,
(ii) retain the premium;

(b) if such breach is not deliberate or reckless, and the insurer would not have entered into the variation but for the breach, the insurer may treat this policy as if the variation was never made, in which case the insurer shall return any additional premium relating to the variation; and

(c) in all other cases if, but for the said breach, the insurer would have entered into the variation but:
(i) on different terms (other than terms relating to the premium), the insurer may require that the variation is treated as if it had been entered into on those different terms;
(ii) would have increased the premium by more than it did or at all, the insurer may charge such higher premium, effective from the effective date of the variation, and the insured shall pay such higher premium no later than fourteen (14) days after receiving the insurer’s written notice that such higher premium is payable; or
(iii) would not have reduced the premium by as much as it did or at all, the insurer may require the insured to reimburse to the insurer a sum equal to any reduction in premium no later than fourteen (14) days after receiving the insurer’s written notice that such amount is payable.

The changes will take would have charged a higher premium, the insurer may charge such higher premium, effective from inception, and the insured shall pay such higher premium no later than fourteen (14) days after receiving the insurer’s written notice that such higher premium is payable.

6. Fraudulent claims

6.1 If the insured or anyone acting on its behalf makes a fraudulent claim under this policy, the insurer:
(a) Is not liable to pay the claim;
(b) may recover any part of the claim already paid from the relevant insured; and
(c) may by notice to the insured treat this policy as having been terminated with effect from the time of the first fraudulent act, in which case the insurer is not liable to that insured in respect of a relevant event occurring after that time and may retain any premium.

6.2 These remedies shall not be available against any other entity insured under this policy that was not implicated in the fraud.

7 Terms not relevant to the actual loss

Where: (i) the insured has failed to comply with any express or implied term of this policy, other than a term that defines the risk as a whole; and (ii) compliance with such term would tend to reduce the risk of loss of a particular kind, at a particular location and/or at a particular time, the insurer cannot rely on the failure to comply to exclude, limit or discharge the insurer’s liability if the insured shows that the failure to comply could not have increased the risk of the loss which actually occurred in the circumstances in which it occurred.

8 Incorporation

8.1 The provisions of this endorsement replace the following provisions in the policy:
(a) Material inaccuracy clause;
(b) Material alteration clause; and
(c) Fraud clause (where applicable)


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