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

Transcribing information to screen
9.55 We were also interested to note another development in the protection market.
Despite the increased use of tele-sales and websites, most protection insurance
is still sold face to face, using a paper form. 31 Insurers are increasingly paying
intermediaries additional commission to transcribe the information from paper to
an electronic medium, so that it can then be submitted to the insurer
electronically. Intermediaries complain that some transcription processes are
time-consuming and painful, with opportunity for error. 32
9.56 We are not clear who bears responsibility for any errors that occur when an
intermediary transcribes information to screen at the insurer’s behest. The courts
may well maintain the current rule that independent intermediaries should be
considered to be the agent of the insured. However, it could be argued that if an
insurer is paying an intermediary to transcribe information in a specific way using
the insurer’s system, then the intermediary completes this particular task as the
insurer’s agent. The insured will not know that the task is taking place, or have
any control over the process.
Why does it matter?
9.57 We will see later that in some ways the issues relate to procedure rather than
substance. If the insurer succeeds in avoiding the policy because the
intermediary is negligent, the consumer would have a good claim against the
agent for negligence. The claim may be brought either through the courts or the
FOS. However, no-one’s interests are served if the consumer pursues a long
complaint against the insurer and is then told to start all over again against a
different firm. The complainant suffers unnecessary stress and delay; the FOS
has two complaints instead of one; and the industry may experience significant
damage to its reputation. There is an obvious need for clarity in this area. We
explore this further below.
31 Above, p 4.
32 Above, pp 5-6.
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