Silence over insurance law reform bucks ABI habit

An insurance industry group that is very often quick to shout down critics is keeping uncharacteristically quiet over moves to reform a century old law in favour of policyholders.

The Treasury is consulting on proposals to change the law so insurance companies can no longer avoid a payout because a policyholder has made an honest mistake on a claim form.

Consumer campaigners like Which? and Consumer Focus, industry groups like the British Insurance Brokers’ Association and the Chartered Insurance Institute (CII) plus medical charities all back fast tracking the a bill through Parliament to change the law as soon as possible.

Many insurers already follow this as best practice, but the group who should shout loudest and longest, the Association of British Insurers (ABI), is sitting on the fence, saying they neither support nor oppose the change.

The legal shake up will remove a policyholder’s “duty of disclosure” to an insurance company. This duty is the controversial point that allows insurers to turn down a claim if a policyholder has neglected to disclose information that might affect a payout.

In many cases, policyholders feel insurers have unfairly rejected claims because a minor detail has been left off the paperwork. The change will stop this practice and allow honest omissions or errors without prejudicing a claim. All types of insurance is affected by the proposed change, from life to home insurance cover.

The ABI proudly boasts that it is the voice of the UK’s insurance, investment, and long-term savings industry.

With more than 300 mainly corporate members, which together account for around 90% of premiums in the UK domestic market, the ABI speaks for some of the richest and most influential businesses in the country – and coincidentally, these are the same firms that stand to lose most if the law change is enacted.

The matter is not listed on the ABI’s web site under topical issues, although eight other insurance-related legal and procedural proposals are included.

The resounding silence of the ABI in calls to support consumers rather than insurers is deafening. Effectively, they are ignoring the issue and hoping it will go away.

By not opposing the proposal, they are hedging their bets that they are not tarnished, as the bad guys when the law goes through, as campaigners and consumers trust it will.

The passage through Parliament would be easier with the ABI’s support. It’s a timely and obvious piece of legislation that removes stress for honest claimant’s who often need the payout at a time when the lives are at their lowest.

To anyone outside the industry, opposing the proposal is nonsense and the ABI stance comes across as stubborn protecting and endorsing unreasonable behaviour that has cost too many ordinary people too much for too long.

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