Northern Ireland companies must ensure they are familiar with major changes governing commercial insurance here amid the biggest shake-up in more than a century.
Jeff Graham, senior vice president of insurance broker Lockton Belfast, has welcomed the Insurance Act 2015, which comes into effect on Friday (August 12).
He said the new legislation will offer more protection to policy holders but warned there are additional requirements they must now meet to ensure insurance companies provide full cover in the event of a claim.
"This has been a long time coming," Mr Graham said.
"This is the first time there has been an overhaul in legislation in more than 100 years and will make the process more user friendly and favour policy holders rather than insurance companies."
Mr Graham said there are a number of significant changes, including the fact that any financial penalties imposed by insurance companies will have to be proportionate.
He added: "Previously, if there was a breach of warranty the insurer could have used that to avoid paying for a claim, irrespective of whether or not the claim related to the breach of warranty.
"For example, if there was a clause in a policy that they must set an alarm and the company forgets to do that and a plane falls out of the sky and lands on the building the insurer could have said the alarm wasn't on so they weren't going to pay out.
"Of course, if you forget to put on the alarm and the premises are broken in to then that is a different matter.
"Essentially, the breach of warranty has to be related.
"You may have a vacant property and the insurer states it has to be inspected every two weeks.
"Previously, if something happened to those premises and the insurer found out that the policy holder had failed to inspect the property on one occasion six months ago they could have refused to pay out.
"They can no longer put that argument forward, the failure to inspect has to happen in the period immediately before the issue relating to the claim."
Mr Graham said the Act introduces a new duty to make a fair presentation of risk to insurers, and this now includes information known as senior management.
There is also an additional obligation to make a reasonable search for such material information. He said that while there is not yet a clear definition of senior management, companies will be expected to prove they carried out procedures involved in a reasonable search.
"Simply put, all parties seeking insurance cover should be aware of the requirements of the Act and examine more closely possible risks that they face in their business and disclose this information to their insurer through their broker," said Mr Graham.
"The renewal process for a company's insurances has to now be given more time and approached in a much more structured and strategic manner if a business is to satisfy insurers that the senior team has been fully consulted and a reasonable search for relevant information completed.
"For our part we have been working with our clients to ensure they are aware of the changes and what they have to do to comply."