Insurance Act 2015

The Insurance Act 2015 is the principal statute governing non-consumer insurance contracts in the United Kingdom, introducing the duty of fair presentation, reforming warranties and providing proportionate remedies for breach.

Definition §

The Insurance Act 2015 ("the Act" or "IA 2015") is the most significant reform of English and Scottish insurance contract law in over a century. It received Royal Assent on 12 February 2015 and its main provisions came into force on 12 August 2016, applying to non-consumer insurance and reinsurance contracts entered into, varied or renewed on or after that date.^[1]

The Act addressed long-standing criticisms that the regime established by the Marine Insurance Act 1906 — particularly the absolute duty of disclosure and the doctrine of automatic discharge for breach of warranty — produced disproportionate outcomes that no longer reflected commercial expectation. It was the product of more than a decade of joint review by the Law Commission of England and Wales and the Scottish Law Commission, culminating in their July 2014 report and accompanying draft Bill.^[2]

The Act is structured around four substantive reforms: a new statutory duty of fair presentation of the risk (sections 3 to 8); reforms to warranties and other terms (sections 9 to 11); a new statutory regime for fraudulent claims (section 14); and, following amendment by the Enterprise Act 2016, an implied term requiring insurers to pay sums due within a reasonable time (section 13A).^[3] Sections 16 and 17 govern contracting out, permitting parties to derogate from most default rules in non-consumer contracts only where transparency requirements are satisfied.

Legal / Regulatory basis §

The Act applies to contracts of insurance and reinsurance, but not to consumer insurance contracts (which remain governed by the Consumer Insurance (Disclosure and Representations) Act 2012). Section 22 sets out commencement and application: the main reforms applied to contracts entered into on or after 12 August 2016, while section 13A (inserted by section 28 of the Enterprise Act 2016) came into force on 4 May 2017.^[4]

Section 3 imposes the duty of fair presentation: an insured must disclose every material circumstance it knows or ought to know, or alternatively disclose sufficient information to put a prudent insurer on notice that further enquiries are needed. The disclosure must be made in a manner that is reasonably clear and accessible to a prudent insurer, and every material representation as to a matter of fact must be substantially correct.^[5]

Sections 4, 5 and 6 codify the rules of knowledge — what the insured and insurer respectively know or ought to know — and section 7 contains supplementary provisions on agents and the time at which knowledge is assessed. Section 8 introduces Schedule 1, which sets out proportionate remedies for breach: avoidance with return of premium where the breach was deliberate or reckless, and otherwise a proportionate response reflecting what the insurer would have done had a fair presentation been made.^[6]

Sections 9 to 11 reform warranty law. Section 9 abolishes "basis of contract" clauses in non-consumer insurance. Section 10 reverses the rule in The Good Luck that breach of warranty automatically and permanently discharges the insurer's liability, converting warranties into suspensive conditions. Section 11 restricts an insurer's ability to rely on breach of a term where compliance would not have reduced the risk of the loss that actually occurred.^[7]

Section 14 abolishes the common-law doctrine of utmost good faith as a ground for avoidance and provides a statutory regime for fraudulent claims, permitting the insurer to refuse the fraudulent claim and recover any sums paid in respect of it, and to terminate the contract from the time of the fraudulent act.

How it works in practice §

In practice, the Act has reshaped placement, wording and claims practice across the London Market and the wider UK commercial insurance sector. Brokers and risk managers now structure pre-inception disclosure exercises around the section 3 duty of fair presentation, conducting a "reasonable search" of information available within the insured's organisation as required by section 4. Underwriting submissions are typically structured so that material circumstances are organised in a manner that is reasonably clear and accessible — for example, through indexed underwriting packs rather than voluminous unstructured data rooms.

When a breach of the duty of fair presentation is alleged, insurers must apply the Schedule 1 proportionate remedies framework. If the breach was neither deliberate nor reckless, the insurer must demonstrate what it "would have done" had a fair presentation been made: declined the risk entirely (avoidance), written it on different terms (those terms are treated as having applied), or charged a higher premium (the claim is reduced proportionately). This is a significant departure from the all-or-nothing position under the Marine Insurance Act 1906.^[8]

Warranty reform under section 10 means that an insurer's liability is suspended during the period of breach but resumes once the breach is remedied. Section 11 prevents insurers from declining claims by reference to terms designed to reduce the risk of loss of a particular kind, at a particular location, or at a particular time, where the insured shows that non-compliance could not have increased the risk of the loss that actually occurred.^[9]

Sections 16 and 17 allow parties to contract out of the default rules (except section 9 in non-consumer contracts) where the disadvantageous term is clear, unambiguous and brought to the insured's attention before the contract is entered into. The transparency requirements are intended to prevent insurers from reverting to the pre-2015 position through standard-form policy wordings without conscious negotiation.^[10]

Common variations §

The Act applies uniformly across England, Wales, Scotland and Northern Ireland, but its operation varies by class of business. In the marine and aviation markets, where contracts often follow Lloyd's slip conventions, market bodies including the LMA and IUA have produced model clauses to reflect Schedule 1 remedies and section 11 carve-outs. In retail SME commercial insurance, the Act applies in full but is rarely contracted around, so the statutory regime operates by default.

Reinsurance contracts fall within the Act unless the parties contract out under section 16 or 17. Many facultative and treaty reinsurance wordings include express provisions modifying the proportionate remedies framework, frequently restoring something closer to the pre-Act avoidance remedy for non-disclosure, but only where the transparency requirements are met.

For consumer insurance, the Act does not apply: the Consumer Insurance (Disclosure and Representations) Act 2012 continues to govern pre-contractual duties, with the consumer owing only a duty to take reasonable care not to make a misrepresentation.

Example §

A medium-sized manufacturer renews its combined commercial policy on 1 April 2026. The broker prepares an indexed underwriting submission covering claims history, sprinkler protection, and a recent acquisition of a subsidiary in continental Europe. The submission is in a structured pack with a contents page directing underwriters to material circumstances relating to the new subsidiary's loss record.

Six months later, a fire occurs at the original UK site. During the claim, the insurer discovers that the broker omitted a near-miss incident at the European subsidiary in February 2026. Under section 8 and Schedule 1, the insurer assesses whether the breach was deliberate or reckless (it was not, being an oversight) and what it would have done had the near-miss been disclosed. The insurer concludes that it would still have written the risk but would have charged a 12 per cent higher premium. Schedule 1 paragraph 6 accordingly entitles the insurer to reduce the claim payment proportionately, rather than avoiding the policy outright.

See also §

• /wiki/fair-presentation-of-the-risk/ — the central pre-contractual duty under sections 3 to 8
• /wiki/material-circumstance/ — what must be disclosed under section 3
• /wiki/reasonable-search/ — section 4 knowledge of the insured
• /wiki/warranty-insurance/ — sections 9 and 10 reforms
• /wiki/section-11-insurance-act-2015/ — terms not relevant to actual loss
• /wiki/section-13a-claims-handling-duty/ — implied term on prompt payment
• /wiki/marine-insurance-act-1906/ — predecessor statute
• /wiki/consumer-insurance-disclosure-and-representations-act-2012/ — the consumer counterpart

References §

1. ↑ Insurance Act 2015, available at https://www.legislation.gov.uk/ukpga/2015/4
2. ↑ Law Commission and Scottish Law Commission, "Insurance Contract Law: Business Disclosure; Warranties; Insurers' Remedies for Fraudulent Claims; and Late Payment" (Law Com No 353 / Scot Law Com No 238, July 2014), https://lawcom.gov.uk/
3. ↑ Insurance Act 2015, sections 3-14, https://www.legislation.gov.uk/ukpga/2015/4
4. ↑ Insurance Act 2015, section 22; Enterprise Act 2016, section 28, https://www.legislation.gov.uk/ukpga/2016/12
5. ↑ Insurance Act 2015, section 3, https://www.legislation.gov.uk/ukpga/2015/4/section/3
6. ↑ Insurance Act 2015, sections 4-8 and Schedule 1
7. ↑ Insurance Act 2015, sections 9-11; The Good Luck [1992] 1 AC 233
8. ↑ Insurance Act 2015, Schedule 1
9. ↑ Insurance Act 2015, section 11
10. ↑ Insurance Act 2015, sections 16-17