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Insurers to face tougher disclosure law

22 December 2009

The Law Commission has published a draft Bill to reform the law of disclosure in consumer insurance contracts, putting insurers under a greater duty to ask specific questions rather than rely on consumers to volunteer information.

“The current law requires a consumer to volunteer information about anything which a ‘prudent insurer’ would consider relevant,” a Commission spokesman said. “This no longer corresponds to the realities of a modern mass consumer insurance market.

“It is clearly important that insurers receive the information they need to assess risks. Most insurers, however, now accept that they should ask questions about the things they want to know.

“Our draft Bill replaces the duty to volunteer information with a duty on consumers to take reasonable care to answer the insurer’s questions fully and accurately.”

The spokesman said that where a consumer made a mistake on an application form, the draft Bill distinguished between mistakes which were ‘reasonable’ or ‘careless’ and those which were ‘deliberate or reckless’.

The duty of disclosure in consumer and other insurance contracts is currently based on the Marine Insurance Act 1906.

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Company, Consumer, and Contract Financial services & Tax Discrimination Children