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

C.6 Below we consider consumer and small business cases separately. We start by
looking at the 190 consumer cases. We then consider the particular issues raised
by small businesses.
THE CONSUMER SAMPLE
C.7 Although the cases covered a variety of different types of policy, the largest group
related to critical illness. Table 1 records the type of policy, using the
classifications adopted by the FOS.
Table 1: Consumer cases – by type of policy
No. % No. where alleged
non-disclosure
related to a health
issue
Motor 22 12 0
Building/contents 32 17 0
Critical Illness 93 49 92
Income protection/permanent
health
19 10 19
Loan protection 7 4 7
Travel 6 3 5
Private medical/dental 3 2 3
Whole of life 2 1 2
Term insurance 2 1 1
Other 4 2 0
Total 190 100 129
C.8 There is some overlap between these categories. For example, many of the
critical illness policies were used to protect a mortgage or other loan, and some
policies involved elements of critical illness, income protection and life cover.
What emerges most clearly from the table, however, is the preponderance of
health-related insurance. In all, two thirds (68%) of the consumer cases in our
sample involved an alleged non-disclosure related to the policyholder’s health 4 –
an issue that may arise in travel, health, life or critical illness cover.
C.9 Motor and household insurance also featured, together with a few miscellaneous
categories, including pet insurance and boats.
C.10 Table 2 shows the main information that the insurer said was not disclosed.
Although health issues dominated the sample, the non-disclosure of the
policyholder’s past claims record, past losses or previous convictions may also
give rise to problems. In motor insurance, there were seven cases in which the
insurer said the policyholder had misled them about the identity of the main driver
or owner of the vehicle. In buildings insurance, three cases involved issues about
previous signs of subsidence.
4 This includes information about how much the policyholder smoked, and about the health
of other members of the family, where this is used to assess the policyholder’s own
vulnerability to disease.
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