Consumer champions have taken a massive step forward in overturning an archaic law that lets insurers refuse claims if they consider the customer has failed to disclose ‘relevant information’.
The Trading Standards Institute (TSI) has campaigned for a change for two years – and came closer to their goal when a new bill completed its first reading in the House of Lords.
The Consumer Insurance (Disclosure and Representations) Bill will remove clauses in The Marine Insurance Act 1906 that are seen as heavily weighted against consumers.
The act lets insurers refuse claims if the policyholder failed to disclose information when they signed up for cover – even if they answered questions honestly and reasonably.
The law affects all insurance – including car insurance, home contents policies and life cover based on medical conditions.
The TSI has challenged the unfairness of the law since May 2009 and lobbied for insurers to have to ask questions requesting specific answers rather than expecting consumers to volunteer information about anything which a ‘prudent insurer’ might consider relevant.
David Sanders, TSI lead officer for civil law, said: “We have campaigned long and hard for consumer laws that are appropriate to the modern age and fair to consumers and traders alike.
“Like other ancient laws devised solely for business, such as Sale of Goods law and Bills of Sale, consumer insurance law is totally inappropriate for consumers in the modern age and often leads to great hardship for consumers – sometimes when there is already the stress of serious illness.”
Many insurers have tacitly indicated they will accept the changes proposed in the new bill.
Peter Tyldesley, a lecturer in insurance law at Manchester University, who has been at the forefront of the TSI campaign, said: “It is great news to hear that the government has decided to implement the Law Commissions’ recommendations for the reform of key aspects of consumer insurance law.
“The law was not developed with consumers in mind, it sets unreasonable standards for them to meet and punishes them disproportionately when they fail. Insurance law reform will bring benefits for all – a guaranteed fairer deal for consumers and renewed confidence in the insurance industry.”
So it seems that there may be justic out there after all, great news for the lobbyists, and a round of applause from The Insurance Blogger