On 30 June 2015 the Deregulation Act 2015 will come into effect after obtaining Royal Assent in March as part of the Government’s ‘Red Tape Challenge’ which was introduced to simplify the regulatory process.
What does this mean?
From a Motor Insurance perspective it means that there will be changes to the Road Traffic Act 1988 (RTA) around the return and recovery of motor insurance certificates. In summary, these changes mean:
- Insurers are still required to send and deliver certificates to the policyholder, but the delivery of the certificate is no longer a requirement for cover to be effective. For non commercial customer insurance contracts cover will be effective from the requested start date and the transaction is then completed on the insurance provider’s system, or a customer completes the purchase on the internet. For commercial risks, cover is effective from the time and date shown on the certificate or temporary cover note.
- Where a policy is cancelled mid-term, policyholders will no longer have a legal obligation to return the certificate or make a statutory declaration that the certificate has been lost or destroyed.
- Cancellation of cover – which should be of a written form – will take effect from the agreed or notified date and will not be dependent on return of the certificate. Any return of premium due to the policyholder will be calculated in accordance with the terms of the policy and will also not be dependent on the surrender of the certificate.
- Insurers are no longer required to retrieve the certificate after policy cancellation in order to avoid an ongoing liability.
- Insurers’ ongoing liability will cease once the Motor Insurers Database (MID) has been updated with the policy cancellation transaction. If an accident occurs after the transaction date, and alternative insurance arrangements have not been made, the matter will fall for consideration by the Motor Insurers Bureau (MIB).
- Policy wordings and certificate wordings will need to change where there are references to the return and recovery of the certificate for the cancellation process.