Loss modelling for risk disclosure

The Insurance Act 2015 is the most fundamental change to the law of England and Wales, Scotland and Northern Ireland governing commercial insurance and reinsurance since the Marine Insurance Act 1906.

The Act, which will govern polices placed, amended or renewed after 12th August 2016, makes amendments to the Marine Insurance Act 1906 to reflect modern commercial practice. The Act aims to address the imbalance between insurer and insured rights by making significant changes to several areas, including the following:

  1. The duty of disclosure and the remedies available to the insurer in the event of material non-disclosure and misrepresentation
  2. The interpretation of warranties and terms not relevant to the loss
  3. The abolition of Basis of Contract clauses

The insured business benefits from the more sympathetic interpretation under 2) and the abolition of basis clauses under 3) but has a more onerous responsibility of disclosure under 1) above the penalty for failure is to expose the business to an “average” adjustment of claims in the ratio of the premium actually charged to that which would have been charged with full disclosure.

Members of AIRMIC have identified the following components of disclosure as being of particular concern:

disclosure components

Pragmaticum is a specialist organisation so cannot, and would not offer a service solution for all these components. It is however able to assist in identifying business relationships and constraints particularly in the supply chain and principal resources for operation. Thereafter the potential financial importance of these different components can be modelled in different loss scenarios.

In addition we are able to assist businesses consider in advance of a loss the evidence, and its location, that it will be relying on to prove its losses so that this information is correctly formatted and preserved.


Pragmaticum Limited is authorised and regulated by the Financial Conduct Authority. Ref: 501527