Employers insuring employee benefits need to be ready for the Insurance Act 2015, which comes into effect from 12 August 2016.
The Act replaces law that has been in place since 1906 and applies to all non-consumer insurance policies that incept, vary or renew on or after 12 August 2016. From Aon Employee Benefits, the UK health and benefits business of Aon plc (NYSE: AON). The Act is designed to create fairer, modern and clearer practices within the UK insurance market. However, there are some significant changes employers need to take note of, for example, in relation to areas such as the ‘duty of fair presentation of a risk’, which replaces the duty of disclosure and whose knowledge is relevant. Failure to meet the duty of fair presentation of a risk will vary depending on the reasons for failing to meet this obligation and depending on what the insurer would have done differently had the duty been met at the outset.
Who is involved is important too. The changes mean the most relevant people may need to be involved in the information sweep to ensure compliance. This could include the highest levels of management – e.g. the board – but will vary depending on an organisation’s structure. It can also include the people covered by the insurance, plus others who may hold information – so advisers, consultants, suppliers and so forth. Matthew Lawrence, Chief Broking Officer, Health & Benefits UK and EMEA, Aon Employee Benefits said:
“We are concerned that there appears to be a general perception in the employee benefits world that the Insurance Act will not have a major impact on health and risk insurances. Having worked on this matter for many months we believe that the Act could have significant implications in this area as insurers are adopting some very differing stances on what constitutes a fair presentation of a risk and some have thus far been silent on the subject”.
Lawrence advised employers to work with their employee benefits consultant to ensure they understand all of the relevant changes introduced by the Act, what this means in practice and what the implications are for failing to comply.
