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

11.39 Unlike our other proposals, this would go further than existing FSA requirements
and FOS guidance. It represents a change of practice and would need to be
costed separately. We are currently working with reinsurers in the life insurance
sector to understand the effect of our proposals in greater depth. We would
particularly welcome comments on the costs and benefits of this particular
proposal. These will need to be examined with care and assessed separately
from the cost of our other proposals.
11.40 We propose that the effect of a five year cut-off period for negligent
misrepresentations should be costed separately from the costs of our other
proposals.
11.41 We ask whether consultees who are reinsurers in the life insurance sector
are able to provide us with data to enable us to carry out this assessment.
CONCLUSION
11.42 The preliminary economic analysis we have commissioned suggests that where
consumers are already buying insurance from reputable insurers they will be
asked to pay only a very small extra premium for the increased protection and
peace of mind that the insurance will provide. In return all consumers would be
protected against the more exploitative arrangements – those that appear to
promise peace of mind, but fail to deliver when they are needed. Reputable firms
will incur few if any extra costs and disreputable firms will be forced to change
their practices if they are to remain in business.
11.43 At present, we do not have sufficient robust data to quantify the effects of our
proposals with precision. We ask consultees, first, to comment on the model we
propose in Appendix B, and, secondly, to give us the best estimate they can of
the cost and benefit of each proposal – or, if they would support something
different, of the proposal they support.
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