Insurance Act 2015 – David Savage of Charles Russell Speechlys comments

Following media reporting of the 2015 Insurance Act coming into force – David Savage, Head of the Construction and Infrastructure Sector at international law firm Charles Russell Speechlys comments on the possible implications for the construction industry.

“The Insurance Act 2015 has come into force today. Insurance underwrites an array of risks and liabilities which are associated with any construction project. For the construction industry, this Act touches and concerns all who are involved in a project.

“One of the interesting features of the Act is that it essentially codifies the common law position that an insured owes a duty to its insurer of fair presentation before entering a contract of insurance. The insured is required to give a fair and accurate presentation of material facts that enable a prudent insurer to form a proper judgment, either on the presentation alone, or by asking questions if it wants to know further details. The form of presentation will now be under scrutiny.  An insured will no longer be able to discharge its duty by pointing to a material fact which were hidden in a wealth of information disclosed to the insurer before the parties entered into the contract of insurance. The insured will need to give consideration on how best to present the information to clearly draw to the insurer’s attention such material facts. This is good news for the insurers – they no longer have to hunt for needles in haystacks.

“For insureds, ignorance will not be bliss. There is now a new positive duty imposed on the insured to have conducted a reasonable search of information available within not only its own organisation but also information held by third parties including the insured’s insurance broker.  The insured is assumed to know what should reasonably have been revealed by undertaking such a search.  For large organisations, this may be extremely problematic. Times seem to have just got tougher for the construction industry.”