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

Section 4 Baseline analysis of insurance markets and the extent of non-disclosure
Table 14: List of insurance markets suggested for full cost benefit analysis
and primary reason for inclusion
Insurance Market Rationale
Vehicle Insurance 13 Market penetration (number of households covered)
Aggregate size of market (value of premiums)
Incidence of complaints brought to FOS
Inelastic Demand
Buildings Insurance Market Penetration
Aggregate size of market
Inelastic Demand
Contents Insurance Market Penetration
Aggregate size of market
Private Medical Insurance Average household expenditure
Product Complexity
Critical Illness Insurance Incidence of declination of claims for non disclosure
and misrepresentation
Incidence of complaints brought to FOS
Average claim size
Income Protection Insurance Incidence of complaints brought to FOS
Life Assurance Average household expenditure
Aggregate size of market
Average claim size
Incidence of declination of claims for non disclosure
and misrepresentation
Potential for higher investigation costs if a five year
non-contestability period is introduced
We do not believe that the incidence of non-disclosure in other markets is
such that these proposed reforms are either likely to have a significant
economic impact or the information is such that it is unlikely that a full cost
benefit analysis might be undertaken at an acceptable cost.
13 Note that the proposed reforms that are being considered by the Law Commission will not change the
current legislation relating to 3rd Party claims, as under Section 150 of the Road Traffic Act, insurers
are not permitted to avoid a claim if it is a claim relating to a 3rd Party. The proposed reforms to
current legislation will only affect 1 st Party claims.
London Economics
June 2007 31