Misrepresentation, Non-Disclosure and Breach ... - Law Commission

1.5 However, the existence of these different systems of law, regulation and
guidance means that it is difficult for both insurers and consumers to find out
what their rights and obligations are. The FOS issues guidance but it does not
publish its decisions. Moreover some cases fall outside its jurisdiction. The
position for both insurers and consumers can therefore be unclear and
inaccessible.
1.6 For businesses, the Statements of Practice and most of the FSA rules do not
apply. Only those businesses with a turnover of less than £1 million are entitled to
bring cases to the FOS.
1.7 We therefore conclude that the overlapping layers of regulation and discretion are
not a substitute for law reform. We propose reforms which are intended to give
potential policyholders confidence in insurance by ensuring that it meets their
reasonable expectations while protecting the legitimate interests of insurers and
not imposing undue costs or unnecessary restrictions.
OUR REFORMS
1.8 Our reforms deal separately with consumers and businesses. We define
consumers as individuals who take out insurance for purposes wholly or mainly
unrelated to their businesses (see paras 4.5 to 4.12).
• For consumers we propose a mandatory regime which is based largely on
existing FOS practice.
• For businesses, we propose a new default regime, based on accepted good
practice. These rules could be altered by contractual terms, provided that the
alterations are made clear to the business.
PRE-CONTRACT INFORMATION FROM THE INSURED
1.9 It is clearly important that insurers are able to obtain sufficient information from
potential policyholders to assess risks properly. However, the current law on
disclosure can operate as a trap and allows claims to be rejected even where
policyholders have acted honestly and reasonably.
Consumers
1.10 The following proposals will bring the law broadly into line with FOS practice:
x