AIRMIC addresses insurer denials based on nondisclosure

MANCHESTER, England—The Assn. of Insurance and Risk Managers will publish guidance to help risk managers avoid having claims denied on grounds of nondisclosure under the 1906 Marine Insurance Act that is applied to many insurance contracts in the United Kingdom.

John Hurrell, CEO of London-based AIRMIC, said an increasing number of risk managers have told the association that they have had claims denied on the grounds of nondisclosure.

The issue was raised at the association's annual conference held June 15 and 16 in Manchester, England.

Mr. Hurrell said that the 1906 law, which places the onus on buyers to anticipate what a “prudent insurer” would deem “material” underwriting information, means that some risk managers have claims denied for nondisclosure even when it is inadvertent and the information is irrelevant to the claim.

He said that AIRMIC members, who on average buy insurance for six departments across 10 countries, cannot possibly ensure that they have declared everything that an insurer might deem to be material at some later stage.

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

In addition to these efforts, AIRMIC plans to issue a guide to its members this fall to help them avoid this problem in future.

That guide, Mr. Hurrell said, will outline the pitfalls of the current system and provide model clause wording that should help alleviate the problem.