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

9.10 This proposal appears to be very broad-brush. The LRC cannot have meant it
literally: if so, it would apply to the consumer who is going on holiday with a group
of friends and agrees to arrange a travel policy to cover them all. The context
suggests that the LRC had in mind “agents nominated by insurance companies”
– meaning, presumably, people or firms who, at least for some purposes, acted
as an agent of the insurer.
9.11 This comes closer to the class of agents that in 1977 the Government was
considering making “the responsibility of the company for whom they act”. Their
proposal was that anyone who was not registered as an “insurance broker” but
who “was used” by an insurer “to sell insurance” would be treated as the insurer’s
agent, at least in consumer cases.
9.12 Our provisional proposals are narrower than the changes that the Government
was apparently contemplating in 1977. We are not proposing changes in relation
to independent intermediaries, who search the market on the policyholder’s
behalf. Our proposals relate only to intermediaries who offer products from a
single insurer or limited number of insurers only. We think there is a case for
treating these intermediaries as agents of the insurer for the purposes of
receiving pre-contract information from the insured.
9.13 However, we would welcome views both on whether further reform is needed and
on how agents might most usefully be grouped for the purpose of defining the
scope of any reforms.
THE STRUCTURE OF PARTS 9 AND 10
9.14 The remainder of this Part is divided into the following sections:
(1) We outline agency law as it applies to insurance and consider how the
law applies to some of the arrangements now seen in a rapidly changing
market place.
(2) We deal with “the Newsholme problem” – the case where the agent
completes the proposal form and the proposer signs it not noticing a
mistake.
(3) We consider the agent’s independent duty of disclosure under section 19
of the 1906 Act.
(4) We end this Part by looking at the current position for consumers, taking
into account the Financial Services Authority (FSA) rules and the
approach of the FOS.
9.15 Part 10 sets out our proposals for reform, first as it applies to consumer insurance
and then as to business insurance.
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