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

• Any warranty should be set out in writing. Additionally, in consumer cases,
any warranty must be brought properly to the consumer’s attention (paras 8.8
– 8.20).
• A breach of warranty would not automatically discharge the insurer from
liability. Instead, the insurer should pay a claim where the insured can prove
on the balance of probabilities that the event constituting the breach did not
contribute to the loss (paras 8.21 – 8.48).
• For consumer insurance, these rules would be mandatory (paras 8.49 –
8.50).
• In business insurance the parties could agree other consequences for breach
of warranty. There would be special controls where the business contracts on
the insurer’s standard terms. The insurer would not be permitted to rely on a
warranty, exception or definition of the risk in a standard term contract if it
would render the cover substantially different from what the insured
reasonably expected (paras 8.51 – 8.80).
PRE-CONTRACT INFORMATION AND INTERMEDIARIES
1.17 Insurance is often bought through brokers and other intermediaries who give
guidance on application forms and pass information to insurers. It is not always
clear for whom the intermediary is acting, and a policyholder often bears the
consequences of any mistakes or wrongdoing by the intermediary.
1.18 We propose to clarify that “tied agents” who sell the products of a limited range of
insurers should be treated as acting for the insurer. Where intermediaries are
clearly independent, they should be considered to be acting for the policyholder.
We ask whether the test of an intermediary’s independence should be whether
the intermediary has made a “fair analysis” of the market, as defined by the
Insurance Mediation Directive (paras 10.02 – 10.74).
CONCLUSION
1.19 It is not possible in an outline of this length to introduce all of our proposals.
Consultees are therefore encouraged to read both the fuller summary available
on our websites and the relevant sections of this paper. We look forward to
receiving views by 16 November 2007, sent to the address at the front of this
report.
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