This is the second in our series of short blogs IN the run up to The Insurance Act 2015 (IA2015) coming into force on 12 August 2016. Written by Joanne Staphnill from Triton Global, this week she focuses on at what's changed with regards to 'Material' information:
- Monday: Duty of 'Utmost Good Faith'
- Today: 'Material' Information
- Wednesday: ‘Basis of Contract’
- Thursday: Warranties
- Friday: Misrepresentation/Non-Disclosure
What's in store?
The test of what is “material” is similar to the old one. Briefly, the question is whether the information would influence the prudent insurer in deciding whether to take the risk and on what terms.
However, the non-exhaustive guidance at IA2015 s7(4) mentions that a thing is material if someone experienced in that class of insurance would generally understand to be important. By referring to classes of business expressly, IA2015 re-emphasises the importance of understanding what is pertinent to that particular class of business.
What does it mean for insurers?
For insurers and those who advise them on coverage questions, this could be important to some aspects of investigating potential misrepresentation/non-disclosure situations. It might be necessary or at least prudent to look in detail at what sort of information is considered material for that class of business. In high-value cases it might be necessary to obtain expert evidence – with the added difficulty that the expert would have to be an expert in that particular class of business rather than just in underwriting generally.
A material representation regarding a fact has to be “substantially” correct. This new test probably gives the insured some ‘wriggle room’ in the event of a coverage dispute. But it could well become a fertile area for disputes over just how ‘substantial’ “substantially correct” has to be...
About the author
|Joanne is a Solicitor and a Partner in the London office of Triton Global, an international firm of solicitors specialising in the defence of insurance claims. She practices in insurance law, including advising on coverage and drafting insurance policies. She also specialises in the defence of professional negligence claims against a range of professionals, but particularly solicitors, insurance brokers and clinicians. She enjoys singing with the Lloyd’s Choir and motorcycling (yes really).|