Airmic hopes clause will ease disclosure headaches

Airmic has launched a bid to help corporate customers avoid falling foul of the onerous disclosure rules governing UK insurance contracts.

The risk managers’ association is working up a standard clause, to be inserted into insurance contracts, setting out when claims can be paid even if all facts have not been disclosed. It hopes to unveil the wording at its annual conference next month.

Airmic chief executive John Hurrell said the organisation had acted following a survey last year showing that insurers had challenged one third of its members’ claims on disclosure grounds, Half of those challenges had been successful.

Under the Marine Insurance Act of 1906 – which Hurrell said contained the “most onerous disclosure requirements of any country” – policyholders must disclose all material facts.

If insurers can prove that they have not been diclosed, innocently or not, they can then decline a claim.

The Law Commission published insurance law reform proposals in 2008, designed to rebalance the situation in favour of the insured, but they have yet to be implemented.

Hurrell said the act’s disclosure requirements were becoming increasingly complex and unworkable because of the number of territorial divisions they operated through.

He said: “[The disclosure requirement] is almost impossible to meet, particularly because of the speed of change in most organisations. Any process of disclosure will take six months and will be out of date almost as soon as it is produced. The whole situation is becoming increasingly unsatisfactory.

“For the members who have had claims turned down, it’s very important to get certainty,” he said.

He added that Airmic was seeking to make one-to-one agreements with individual insurers rather than a pan-industry deal with the ABI.

Davies Arnold Cooper’s head of dispute resolution, Kenneth McKenzie, said that establishing a more uniform regime was a legitimate move for Airmic.