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

PART 9
PRE-CONTRACT INFORMATION AND
INTERMEDIARIES: ASSESSING THE CURRENT
POSITION
INTRODUCTION
9.1 In this Part and the next we consider the interaction between agency law and the
law of misrepresentation and non-disclosure. We look at three issues:
(1) The pre-contractual receipt of information by intermediaries. What should
the consequences be if an applicant for insurance gives material
information to an intermediary and the intermediary fails to convey that
information accurately to the insurer? Under current law, the issue
depends on whether the intermediary is acting as the agent for the
insurer or for the insured. If the intermediary acts for the insured, the
insurer may avoid the policy. If they act for the insurer, the insurer is
deemed to be aware of the information. However, in many situations the
legal status of an intermediary is unclear.
(2) The completion of proposal forms by intermediaries. An intermediary may
enter incorrect information onto a proposal form that is then signed by the
applicant for insurance. There is case law to suggest that an intermediary
acts as the agent of the applicant when completing a proposal form, even
if they are the agent of the insurer for most or all other purposes.
Furthermore, it suggests that if an insured signs a proposal form, they
must be bound by it. We consider whether the principles set out in the
leading case on this subject, Newsholme Brothers v Road Transport and
General Insurance Co Ltd, 1 should be reformed.
(3) Section 19 of the 1906 Act. This provision imposes an independent duty
of disclosure on an agent to insure. We consider whether change is
needed to the scope of the duty and to the results if the duty is breached.
THE NATURE OF THE PROBLEM
A consumer example
9.2 The following case taken from our survey of ombudsman decisions illustrates
how the issues discussed in this paper impact on consumers:
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[1929] 2 KB 356.
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