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Published 30 junio 2015
The purpose of the Deregulation Act was to cut "red tape" for businesses, organisations and individuals, by repealing legislation which was considered to have little practical use. The provisions in the Act are therefore wide-ranging, covering a variety of areas and legislation, and are coming into force at different times. Section 9, headed "motor insurers", is of key importance for the motor insurance industry.
Essentially, section 9 amends section 147 of the Road Traffic Act 1988, which relates to the issue and surrender of certificates. The two substantive amendments are as follows:
Schedule 3 of the Act amends the wording of various other sections of the Road Traffic Act to tie in with the amendments made under section 9.
Insurers no longer need to try to recover the certificate from the policyholder when the policy is cancelled mid-term in order to avoid a potential liability to deal with a third party claim. The policyholder will not need to return the certificate, or make a statutory declaration or any statement acknowledging that the policy has ceased. It will not be necessary for insurers to consider commencing proceedings in respect of the failure to surrender a certificate.
If the insurer's contractual cancellation is challenged and it is found to have not been in accordance with the policy, then insurers will retain an RTA liability to deal with a third party claim.
Article 75 will need to be updated, as it currently provides that an insurer who has cancelled the policy remains an Article 75 insurer unless the certificate has been recovered, or proceedings have been commenced for its return. A sub-committee at the MIB is considering the amendments that are required to Article 75. Coincidentally, these are also due to go before the MIB's AGM today. It is anticipated that Article 75 may be amended to remove Article 75 status from an insurer where the policy has been cancelled, provided that the MID has been updated to show the cancellation.
Whilst the commencement date for Section 9 and Schedule 3 is today, it is currently uncertain as to whether or not the provisions of the Act will have retrospective effect, i.e. in respect of policies that have already been cancelled. The MIB is seeking clarification on this from the government and some further secondary legislation may be required.
With these changes coming into effect, the law of motor insurance will become simpler. The main consequences of the Act that we foresee for motor insurers include the following:
Insurers should do the following in preparation for the changes:
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