How might the Insurance Act impact clients and their insurance professionals?
We feel that the Act places an onus on the client to issue clear and concise information in relation to the value of their assets via the requirement for fair representation. The insureds will be under a new duty of fair presentation, replacing the general obligation to disclose all material facts. The insured will have to disclose every material circumstance that he or she knows or ought to know, or sufficient information to put a prudent insurer on notice that it needs to make further enquiries to reveal the material circumstances.
Where a client does not have an independent and impartial valuation, or the values are estimates, then should this be clearly raised to the insurer?
Where a client knows that their values are subjective, or not properly allocated across locations, then again does this need to be flagged as part of their insurance submission?
Previously the insured could have data dumped information on the potential replacement values which could have been based on a mixture of inhouse guesstimates, recent project costs or historic valuations. They might have had little faith in the accuracy of their values however the necessity to arrange insurance cover still applied. When considering the new requirement for clients to make “a fair representation” then clearly one of the keys issues for insureds will be the need to substantiate how they have arrived at their values at risk, and whether this actually reflects the best practice of a prudent client.
Does the Act now require clients to better understand the value of their assets to meet this fair presentation requirement?
How we can help – We can assist clients by providing confidence in their declared sums and taking away the risk of non-compliance in relation to fair presentation. Rushton International can provide:
• independent and impartial advice around fixed asset insurable values
• continued service and monitoring of values
• advice on inflationary provisions and any additions or deletions
• all work backed by our PI Insurance