6 February 2015
LMA and IUA prepare for new insurance legal framework
Plans are being made by the Lloyd’s Market Association (LMA) and International Underwriting Association (IUA) to prepare their members for some fundamental changes being made to insurance contract law in the UK.
The Insurance Bill has now completed its passage through Parliament and is expected to become law shortly when it receives Royal Assent. It replaces significant parts of the Marine Insurance Act 1906, which has formed the legal framework of the market for over a hundred years. The reforms introduced by the new statute will impact firms’ day to day operations, primarily in the area of business insurance but also in relation to consumer policy wordings and in relation to the consequences of fraud.
The LMA and IUA are working with a number of leading law firms and counsel to prepare guidance which will highlight changes in the law and where these will have a bearing on the placing of insurance and reinsurance contracts in the market, on contract wordings and in relation to claims. The planned guidance will include a detailed review of the new legislation and it is envisaged that a series of seminars will be run for LMA and IUA members following its publication.
Chris Jones, Director of Market Services at the IUA welcomed the passing of the Insurance Bill. “The IUA has been working closely with the Law Commission over a number of years to help establish a new set of laws that are fit for purpose and relevant to the modern insurance industry.
“Companies have been supportive of the need for reform and are now looking forward to operating under a more modern legal framework that provides greater clarity for clients.”
Kees van der Klugt, Director of Legal and Compliance at the LMA, commented: “In our evidence to the House of Lords committee, which carried out the substantive scrutiny of the proposed legislation, the LMA made clear its support for the core reforms: proportionate remedies for pre-contractual non disclosure; the banning of ‘basis clauses’; breach of warranty having the effect of suspending rather than discharging cover; and forfeiture being the remedy for fraudulent claims.
“We were less supportive of some other changes which did not appear central to the reform programme or to be problem areas in existing law. All changes in the law will to some extent produce uncertainty, as the House of Lords committee acknowledged, and the purpose of our guidance will be to identify these areas so that appropriate action can be taken in underwriting and drafting contracts.”
Once the Insurance Act has received Royal Assent there will be an 18 month transitional period before it comes fully into force.
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Notes to Editors
For further information please contact:
James Milne, Communications Manager
Lloyd’s Market Association
T 0207 327 8405
T 020 7623 2368
About the Lloyd’s Market Association (LMA)
Formed in 2001 and located in the heart of the Lloyd’s Building in the City of London, the Lloyd's Market Association represents the interests of the Lloyd’s underwriting community. All underwriting businesses at Lloyd’s are members, together managing gross premium income of around £26 billion per annum.
For more information visit: www.lmalloyds.com