Insurance Act comes into force

By Michelle Perrett

- Last updated on GMT

The Insurance Act imposes a duty on businesses to include risks, such as fire risk
The Insurance Act imposes a duty on businesses to include risks, such as fire risk

Related tags: Risk, Risk management, Insurance

New legislation came into force last Friday (August 12) that will change the way food and drink suppliers buy their insurance.

The Insurance Act 2015 has introduced an array of changes to the way policies are bought and sold and how disputes are settled.

This new legislation replaces a 100-year old statute and imposes a range of new duties on buyers and sellers.

This includes people within companies being required to seek out information about potential risks. They would also need to disclose more information that could have an effect on their policies.

The legal duty used to be on customers to disclose all material information but the new regulations now require insurance buyers to “make a fair presentation of the risk”.

Relevant information

Vivienne Hexter, technical consultant at insurance company Aon UK, warned food and drink manufacturers that they needed to consider the information that would be “deemed relevant” for their insurance cover.

“This might include unusual factory locations, niche products, or complex supplier arrangements,” ​she said. 

“Relevant information can be anything from local planning permissions on a nearby plot, to global supply chain issues.

“It requires a detailed and up-to-date understanding of the business and its marketplace, and that may need to be provided from the most senior level of management.”

She said that the new regulations were complicated and advised food and drink businesses to work closely with their brokers. 

“There will be no boxes to tick, so understanding the circumstances and issues that might be considered material under the new law is proving a difficult concept for some risk managers to comprehend,”​ she warned.

Senior management

According to Hexter, previously, senior management had only been involved in sourcing and disclosing information that had a material impact on the business.

“Their scope to get involved will become far broader; they will need to play an active role in the risk assessment and information gathering process,”​ Hexter added.

Stephen Netherway, an insurance partner with law firm CMS, said: "Policyholders should benefit as insurers’ ability to refuse claims in totality is restricted, a completely new and additional remedy of proportional claims payments is now made available to policyholders, and the draconian impact of certain insurance terms is removed.

“It’s the insurance equivalent of the pulling down of the Berlin Wall.

“Brexit may leave the insurance market’s abilities to future trade in Europe uncertain, but today will show its ability to adapt to wholesale change in a purely British legal regime.”


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