MANCHESTER, England—Overhaul of a 100-year-old U.K. law that puts insurance buyers at risk of having claims declined on the grounds of inadvertent nondisclosure will be a priority for the Assn. of Insurance & Risk Managers in the coming months.

At its annual conference in Manchester, England, last week, AIRMIC CEO John Hurrell said an increasing number of risk managers have told the London-based association that they have had claims denied based on nondisclosure language in the 1906 Marine Insurance Act that is applied to many insurance contracts in the United Kingdom.

Mr. Hurrell said the law, which places the onus on buyers to anticipate what a “prudent insurer” would deem “material” underwriting information, means that some risk managers have had claims denied for nondisclosure even when it is inadvertent and the information is irrelevant to the claim.

He said AIRMIC members, who on average buy insurance for six company departments across 10 countries, could not possibly disclose every detail that an insurer might deem to be material to coverage at some later stage.

AIRMIC has had preliminary discussions with insurers about inserting side agreements and clauses into contracts in a move to eliminate this problem. These talks have been positive so far, Mr. Hurrell said.

Paul Maynard, London-based chief placement officer for Willis U.K. and Ireland, has had talks with insurers on behalf of AIRMIC. Parent Willis Group Holdings P.L.C. is one of AIRMIC's partner companies.

Mr. Maynard said if contracts included language that eliminates the risk of buyers inadvertently falling afoul of the 1906 law, brokers would be keen to provide similar clauses or side agreements to their clients.

In addition to discussions with insurers, AIRMIC said it plans to issue a guide this fall to help members avoid such claims denials in the future.

Mr. Hurrell said the guide would outline pitfalls of the system and provide model clause wording that should help alleviate the problem, among other things.

David Hertzell, head of the London-based Law Commission, said the independent organization appointed by Parliament that reviews laws in England and Wales would study the issue as part of a wider review of insurance law.

He said the Law Commission would examine ways to ensure greater fairness in the way buyers' claims are denied on nondisclosure grounds.

He said the Law Commission would base its recommendations to Parliament on “best market practice” in this area.