Insurance contract law in need of reform

The Law Commission has released a summary of responses to its consultation paper, ‘Insurance contract law: misrepresentation, non-disclosure and breach of warranty by the insured’. The process found that there was wide consensus across the industry that insurance contract law is in need of reform.

Of the 39 responding insurers and insurance organisations, only four were against reforms. Many felt that confidence in the industry would be improved by having a clearer and simpler legal framework. Insurers generally welcomed the commission’s attempts to enshrine the Financial Ombudsman Service’s approach into law, such as in the following instances:
>> Abolishing consumers’ legal duty to volunteer information
>> Providing insurers with proportionate remedies for negligent misrepresentations.

The commission plans to draft legislation covering this part of the project as a priority. A draft bill and report should be ready by the summer of 2009. A paper summarising responses is available at www.lawcom.gov.uk/docs/ICL_summary_of_responses.pdf