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

Section 4 Baseline analysis of insurance markets and the extent of non-disclosure
Table 10: Non disclosure complaints to the Financial Ombudsman by
market size (2005)
Insurance Product Market Size (£m) Non Disclosure
Complaints - 2005
FOS Nondisclosure
complaints per £m
Buildings Insurance £3,133 47 0.015
Contents Insurance £3,095 88 0.028
Medical Insurance £2,063 15 0.007
Vehicle Insurance £9,543 181 0.019
Critical Illness £125 390 3.115
The information in the Table indicates that for the four major general
insurance markets (buildings, contents, vehicle and private medical
insurance), the incidence of a complaint being brought to the FOS relating to
non-disclosure is between 0.007 and 0.028 per million pounds of household
expenditure. In the case of critical illness insurance, the likelihood of bringing
a complaint is more than 100 times greater at just over 3 per million pounds
of household expenditure.
4.3.1 Ombudsman decisions in relation to
misrepresentation and non-disclosure in critical illness
Information from the Financial Ombudsman Service indicates that of all cases
brought to their attention and resolved through an adjudicator, 12.5% of
judgments found that the firm had not treated the customer’s complaint
fairly; in 10% of cases, the firm had made an offer to the customer but the
adjudicator negotiated an improved settlement and in 6% of cases, the
adjudicator found that the firm had generally treated the customer’s
complaint fairly – but the firm still agreed a goodwill payment.
Of the cases brought to their attention and resolved through an ombudsman,
36% of judgments found that the firm had not treated the customer’s
complaint fairly; in 5% of cases, the firm had made an offer to the customer
but the adjudicator negotiated an improved settlement and in 2% of cases, the
adjudicator found that the firm had generally treated the customer’s
complaint fairly – but the firm still agreed a goodwill payment.
The Law Commission looked at a sample of 93 final ombudsman decisions in
which a critical illness claim had been declined for non-disclosure/
misrepresentation. The results are shown overleaf:
London Economics
June 2007 25