PRESS RELEASE
13 March 2025

LMA convenes market discussion on ten years of the Insurance Act – its aims, successes and challenges

London, 13 March 2025: Earlier this week at a sold-out event in the Old Library in the Lloyd’s Building, the Lloyd’s Market Association (LMA), in conjunction with 7 King’s Bench Walk (7KBW), hosted a distinguished panel of legal experts to discuss whether the much-debated advantages and anticipated problems from the 2015 Insurance Act suggested a decade ago had materialised.

Lord Mance chaired the panel and was joined by:

David Hertzell, Chairman, Mactavish (a former Law Commissioner with responsibility for the Insurance Act)
Christopher Foster, Partner, HFW
Josephine Higgs KC, Barrister, 7KBW
Harry Wright, Barrister, 7KBW, who assisted the LMA in its response to the Law Commission when the new Insurance Act was proposed
Arabella Ramage, Legal and Regulatory Director, LMA

Arabella Ramage, Legal and Regulatory Director at the LMA, explains: “The passage of ten years has highlighted the importance of the changes made by the Insurance Act since it was enacted in 2015. It was the first major piece of legislation for our sector since the Marine Insurance Act (MIA) of 1906, which was a brilliantly drafted piece of legislation for its time and was more or less adopted in many jurisdictions. However, by 2015 the MIA needed updating. The Law Commission needed to ensure that the law remained relevant to modern commercial practices and aligned with other key jurisdictions which were modernising their own local insurance legislation.”

A success?

As the panel discussed, the Act has outperformed expectations:

Arabella comments: “By and large the general opinion is that the Act has been a success. The ambition was to modernise the law and achieve better alignment with other jurisdictions. This has been achieved. The fact that there has also been very little case law on the Act may suggest that people understand the main provisions and that they were clearly drafted. The main achievements of the Act are:

The fact that the remedy for a breach of warranty is not all or nothing achieves a better balance between underwriters and insureds. Also, avoidance is no longer the only remedy for breach of the duty of fair presentation and is generally thought to be a great improvement. The law is now less of a blunt instrument. It seems more balanced.
The abolition of “basis clauses” – which made factual statements into warranties, meaning that if any of the facts were wrong – however irrelevant – the insurer was off cover – is, on any view, a success and something that was badly needed.

As a result of the Act, there has been an effort to improve the way in which disclosure is made to underwriters to ensure that it is more useful and less of a “kitchen sink” exercise.”

And where has it created new challenges?

The Old Library event also covered areas where the legislation had created problems for the market.

Arabella comments: “There are three areas where the Act has caused difficulties. First, confusion where underwriters are using conditions precedent where prior to the Act they would have used a warranty; second, indiscriminate use of clauses by brokers which waive the right to a proper presentation; and third, Section13A, introduced subsequent to the Act, which requires insurers to make payment within a reasonable period of time or be ordered to pay damages by the Court.

“There were concerns that 13A would result in the insured claiming damages as a matter of course, similar to the way in which bad faith is pleaded in the US. There is some anecdotal evidence that this is occurring and the worry is that underwriters and insureds will waste money arguing this part of the case in circumstances where the Court has not yet determined whether underwriters are liable under the main claim.”

And finally

Arabella comments: “One of the great successes of the Act is that it aligned English law with other common law jurisdictions around the world. That has meant English law has retained its position as the most used for Lloyd’s policies. Few in the market would want to see significant changes or reforms to the legislation given how successful the Act has been and the potential cost, in terms of money and time, to make alterations.

The impact of legislation always takes a long time to feed through the system. In truth it may be another ten years before we can really appreciate the long-term ripple effects of the Act. As the insurance market is beginning to experience a softer market, it will be interesting to see if more disputes arise out of the Act.”

- ENDS -

Notes to Editors

Media relations contacts

LMA:
Carole Porter, Head of Communications | +44 20 3307 3947 | Email: carole.porter@lmalloyds.com

Omnia Partners:
Victoria Sisson, Director | +44 794 129 4872 | Email: victoria.sisson@weareomniapartners.com

About the Lloyd’s Market Association (LMA)

The Lloyd's Market Association (LMA) exists at the very heart of Lloyd's, a world-leading global marketplace for complex risk where solutions to challenges are delivered every day. All 55 Lloyd's managing agencies, with a total market stamp capacity of approximately £56.2bn in 2025, and all Lloyd's members' agents, are members of the LMA.

We represent our members' interests to organisations including governments, regulators, and the market's central supporting body, the Corporation of Lloyd's. We provide professional and technical expertise in areas ranging from model policy wordings to the implementation of innovative technologies. We connect with our members to identify and resolve issues facing the market, and work in partnership with Lloyd's and the other market associations to influence initiatives and outcomes. We operate the market's most comprehensive technical education service, the LMA Academy. For more information visit: www.lmalloyds.com.