Briefing: Has the Insurance Act 2015 delivered for policyholders? A broker’s perspective

Back in early 2016, while working for a leading insurer in Reading, I attended a training session on the Insurance Act 2015, which was due to come into force later that year.

I was too busy mentally sparring with a claimant solicitor to pay full attention and, needless to say, I later found myself asking for a summary from my manager.

She told me: “Basically, Lucy, the onus is on us to evidence how customers have misrepresented their risk and why we wouldn’t have insured them had we known the full facts.”

At the time, that felt like a positive shift.

A contractor might evolve from a small operation into a much larger business, engaging more subcontractors and managing multiple projects.

From an underwriting perspective, that represents a very different risk. To the business owner, however, it often feels like normal growth. How this should be dealt with had now been made much clearer.

As a liability claims handler for an insurer, I regularly dealt with non-disclosure and misrepresentation. Now, as a broker, I see the challenges that both insurers and brokers are facing.

Before the Insurance Act 2015, the consequences of this sort of failure to update insurance could be severe. Claims might be declined and policies avoided from inception, effectively treating them as though they had never existed.

The act sought to modernise insurance law and create a fairer balance between insurers and policyholders. It introduced the duty of fair presentation, replaced the previous all-or-nothing approach with proportionate remedies and imposed responsibilities on insurers as well as policyholders.

Where an insurer relies on careless non-disclosure or misrepresentation, it should be able to demonstrate what it would have done had the full facts been known.

Would it have declined the risk, applied different terms or charged a higher premium? The answer should be supported by evidence. Where there is an allegation that a non-disclosure has been either deliberate or reckless, the insurer is relieved of the duty to demonstrate what its underwriting would have been.

Again, such allegations should be based on clear evidence.

Balancing act

Ten years on from the act becoming law, however, it is worth asking whether the evidence required of insurers is always visible in practice.

Policyholders sometimes receive technical correspondence referring to avoidance ab initio, deliberate or reckless misrepresentation or proportionate remedies. These letters often communicate significant decisions, including claim declinatures, policy avoidance and, in some cases, recovery of previously paid claims.

The issue is not that insurers apply the act. It is only fair that they must have remedies where material information has not been disclosed. The question is whether policyholders are given sufficient clarity about how those decisions have been reached.

The evidential burden was intended to be a key safeguard within the legislation. Insurers should not simply state what they would have done – they should be able to demonstrate it.

Clear underwriting evidence should underpin decisions that have significant consequences for cover.

From a broker’s perspective, this matters because most policyholders are not insurance experts. They do not understand the nuances of underwriting appetite, proportionate remedies or legal thresholds for misrepresentation. Many are unaware that seemingly minor changes to their business can materially alter their risk profile.

As brokers, we need to bridge that gap. We help clients understand their disclosure obligations, translate technical language and support them when claims disputes arise.

Yet when decisions are communicated through legal terminology rather than clear explanations, confidence in the process can be undermined. Even where a decision is correct, transparency matters.

There is also a broader question – what happens when an insurer’s interpretation of the act is challenged?

Policyholders can pursue complaints procedures, seek assistance from the Financial Ombudsman Service or obtain legal advice. However, these routes can be time-consuming, costly and daunting.

Challenging an insurer’s position often requires a level of technical knowledge that many policyholders simply do not possess. This is where an insurance broker can help their clients by navigating what can often be a complicated and unfamiliar process.

However, this creates a potential imbalance. The act was designed to promote fairness on both sides of the insurance contract. Policyholders have obligations regarding disclosure, but insurers also have obligations when relying on the remedies available under the act.

Here and now

Ten years after its introduction, the Insurance Act 2015 remains an important and necessary reform. It has undoubtedly improved the legal framework governing commercial insurance and moved the market away from some of the stricter outcomes seen previously.

Perhaps the industry would benefit from returning to three simple principles – clarity over complexity, evidence over assertion and fair treatment over technical defence.

The act changed the law, but legislation alone does not build trust. Trust comes from transparency, consistency and confidence that both parties are being held to the same standards.

The more important question is whether the act has consistently delivered the fairness and transparency it was designed to achieve for policyholders.

I am pleased to say that, now, that conversation is very much happening.

I sit on the Industry Claims Working Group convened by Biba, where insurers, brokers, loss adjusters and loss assessors come together with a shared objective of achieving good customer outcomes.

One recent example is the Group’s guidance, A Clearer Approach to Disclosure, which seeks to simplify and standardise questions around convictions, insolvencies and policy cancellations, while ensuring this is a fair and specified time frame, for example the last five years, rather than these be disclosed in perpetuity

By making disclosure requirements clearer and more concise, there is less room for misunderstanding about what should be declared. That benefits everyone, but most importantly, it benefits the client.