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

Section 4 Baseline analysis of insurance markets and the extent of non-disclosure
From this information we have assessed that buildings and vehicle insurance
are less price elastic given the fact that it is either a statutory requirement or
linked to the terms and conditions of a mortgage offer. We have also
described mortgage protection insurance, term assurance, income protection
and critical illness coverage as being relatively inelastic given the complexity
of some of the products being sold and the fact that they are sometimes
linked to the sale of other financial products. We have assumed that contents
insurance, private medical insurance, pet, and payment protection insurance
are relatively elastic given the fact that there is no requirement to hold these
types of insurance. In determining the relative elasticities, we are aware that
there may be some disagreement with our assessment and we would urge
consultees to provide their view on the appropriateness of our assessment.
4.5 Section Conclusion
In this section of the report, we have attempted to gather together the
relevant information to allow the characterisation of the various insurance
markets. We have done this by considering the market penetration of various
insurance products, as well as average premiums and the extent of claims
being refused for reasons of non-disclosure or misrepresentation.
Given the information presented, we believe that the following insurance
markets should be assessed for a full economic cost benefit analysis, as well
as the primary reason(s) for selection. We would appreciate the view of
consultees on the appropriateness of the selection and the provision of any
information or data that might be able to improve this first selection.
London Economics
June 2007 30