New government plans to protect consumers were revealed yesterday, as Insurers prepared to have to ask more questions before offering insurance to an individual. The Consumer Insurance (Disclosure and Representations) Bill will hope to see changes to the way insurance companies go about their business.
Current laws see many claims rejected because the claimant has failed to disclose vital information during the application process, often by reading questions in a different way to how they are intended.
The new rules will see the responsibility switch from the consumer, who is currently expected to disclose all the relevant information, to the insurer, who would be expected to ask all of the relevant questions.
Surprisingly, the insurance laws have barely changed since 1906, especially given the evolution in fraudulent crimes, job situations and general evolution of technology.
Financial secretary to the Treasury, Mark Hoban revealed that he felt the law had become to confusing for consumers, and was also too expensive to administer in its current wording.
“These [reforms] will provide a better deal for the consumer, while saving money for the industry and giving people the certainty they need when taking out insurance,” he said.
The Trading Standards Institute also welcomed the move, adding that the old laws were “heavily weighted against consumers”.
“Like other ancient laws devised solely for business, 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,” said David Sanders, TSI lead officer for civil law.