Law Commission reforms will favour claimants
by Gill Montia
Story link: Law Commission reforms will favour claimants
The Law Commission has published proposals that could make it easier for consumers to make claims against their insurance policies.
The law covering insurance claims dates back 100 years and the Commission believes it needs to be updated to reduce the number of claims refused because consumers have made unintentional errors in completing proposal forms.
Insurance companies are making decisions based on the Marine Insurance Act 1906, which was introduced at a time when private insurance was the preserve of a few wealthy people.
The Commission believes that this legislation is no longer suitable for modern mass market policies or compulsory cover, such as third party motor insurance.
As things stand, policyholders may be denied claims even when they have acted honestly and reasonably, as a question included in a proposal form may be unclear or outside their knowledge.
In addition, insurers can refute claims even if the errors or omissions would have had no effect on the policy or the premium.
The Law Commission’s proposals mean that dishonest or reckless insurance buyers could still have a claim rejected and forfeit their premiums.
Where the errors would have caused a premium increase or special terms, the Commission believes that claims should be met proportionally.
The Association of British Insurers is cautious about the proposals and takes the view that changes in legislation are unlikely to provide a better service for consumers.