Sections 12 and 13 of the Insurance Act 2015 put the remedies for a fraudulent claim on a clear statutory footing. For professional firms the provisions are a reminder that the integrity of a claim presentation matters as much as the integrity of the risk presentation.
Where the insured makes a fraudulent claim, section 12(1) gives the insurer three cumulative remedies:
Section 12(2) confirms that if the insurer terminates from the time of the fraudulent act, it need not return any premium, and it may refuse liability for anything happening after that time — but earlier, legitimate claims under the same policy are unaffected.
The remedy bites on the whole of the claim tainted by fraud, not merely the exaggerated part. A genuinely valid claim inflated by a fraudulent device — a fabricated document, an invented loss element — can be forfeited in full. That is a deliberate deterrent, and it reflects the pre-Act common law confirmed in cases such as Versloot Dredging v HDI Gerling on collateral lies.
Section 13 deals with group policies, where one person takes out cover that benefits others. If a fraudulent claim is made by one member of the group, the section 12 remedies apply in relation to that person's cover only, protecting the innocent members whose position is not affected by another's fraud.
Professional indemnity claims are usually made by a third party against the firm, and the firm's own conduct in presenting and handling the matter to its insurer falls under these rules. Overstating a defence cost, backdating a file note, or presenting a reconstructed document as contemporaneous can convert a covered claim into a forfeited one. Solicitors, accountants and insurance brokers — professionals who deal in documents and records — are particularly exposed to the temptation and the consequence. The discipline is straightforward: notify early, present honestly, and never improve the paperwork after the event. Apex supports firms in handling notifications so that the claim presentation is accurate and defensible.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 724952. This entry is general information, not advice on any particular policy.