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

1.85 Most of those to whom we have spoken regard harmonisation of insurance
contract law as a distant prospect. Certainly European legislation is not so
imminent to be a reason to delay this review. However the possibility of European
initiatives is a good reason for the review to take place now. Several of those to
whom we have spoken commented that there would be more chance of
influencing the outcome of harmonisation if domestic reform had already taken
place. The reason given was that our current insurance contract law is perceived
as being both unfair and unusual, so that any suggestion that it should form the
basis of a harmonised regime is unlikely to be successful. If it had recently been
reviewed and brought up-to-date, it would be easier to sell as the basis of a
European regime.
STRUCTURE OF THE PAPER
1.86 In Part 2 we give an overview of the law of misrepresentation, non-disclosure and
breach of warranty.
1.87 Parts 3, 4, 5 and 6 consider pre-contract information from the insured. This
involves considering the law not only of non-disclosure and misrepresentation but
also of warranties of past or present fact. As we have seen, the law allows
insurers to use such warranties to provide additional remedies for inaccurate
statements. Part 3 considers the present position for consumers, looking in detail
at FSA rules and ombudsman practice. Part 4 sets out our proposals for the
reform of consumer law (that is insurance taken out by individuals acting outside
their business or profession). Part 5 sets out reform proposals affecting business
insurance. Finally, Part 6 considers some particular problems concerning precontract
information that arise in group insurance, co-insurance and insurance on
the life of another.
1.88 Parts 7 and 8 look at warranties for the future and similar terms. Part 7
analyses the problems, and Part 8 sets out proposals for reform.
1.89 Parts 9 and 10 then deal with pre-contract information and intermediaries.
Problems arise where an intermediary has failed to pass on pre-contract
information to the insurer, or has given the policyholder misleading advice about
what they should tell the insurer. In some circumstances the law also imposes an
obligation on intermediaries to give insurers information known to them in some
other way. Part 9 considers the law, regulation and problems, while Part 10 sets
out proposals for reform.
1.90 Part 11 considers how one might measure the costs and benefits of our
proposals, while Part 12 lists the provisional proposals and questions for
consultation.
1.91 Finally the report includes four appendices:
(1) Appendix A is a chronological account of the previous reports and the
self and statutory regulation introduced in response to the criticisms that
have been made.
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