It's all about a broker and a client, together, putting forward a fair proposal to the insurer. The FCA expects that both parties make full use of all information available and in the case of a broker who supposedly knows about the industry they are arranging cover for, in this instance motor trade, use market facts on top of risks details to complete the presentation.
Information available on many internet services will show published accounts for limited companies, so in the event of a claim where risks are generally vetted in greater detail than at inception by the insurer, significantly inaccurate information shown through ‘appropriate & reasonable enquiries’ will impact on the ability to prove a ‘fair presentation’ has been submitted and could point to a breach of the ‘duty of good faith’. In laymen’s terms:
· The broker must ask the question
· The insured must respond with accurate and up-to-date information from their own reasonable searches of fellow senior management, relevant third parties and the business as a whole
· The broker must make any additional, appropriate & reasonable searches to ratify the information
· A full audit trail of the reasonable searches must be kept
The process will take longer and meetings with brokers will have to be prepared for in advance, however, the benefits for the consumers of UK insurance products are equally measured, with insurers limited on their ability to rebuke claims in their entirety or withdraw cover altogether.
Ignorance of any part of the fact gathering process may impact on the insurance contract. In the past brokers and insureds alike may have been guilty of complacency, assumptions and in some instances blatant malpractice – from the 12th August the most significant change to insurance contract law in over 100 years mean this must and will change.
Happy to add further if anyone needs help.
Paul
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