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

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iv Paragraph Page PART 2: THE CURRENT LAW 22 Introduction 2.1 22 Misrepresentation 2.12 24 Non-disclosure 2.34 30 Warranties 2.43 33 Basis of the contract clauses 2.67 40 Unfair Terms in Consumer Contracts: the 1993 Directive and 1999 Regulations 2.72 42 Conclusion 2.108 50 PRE-CONTRACT INFORMATION FROM THE INSURED PART 3: PRE-CONTRACT INFORMATION AND CONSUMERS: ASSESSING THE CURRENT POSITION 52 The current law 3.1 52 The ABI Statements of Practice 3.5 52 The Financial Services Authority 3.11 54 The Financial Ombudsman Service 3.22 57 The case for law reform 3.73 71 PART 4: PRE-CONTRACT INFORMATION AND CONSUMERS: PROPOSALS FOR REFORM 72 Introduction 4.1 72 Defining consumers 4.5 74 Abolishing the duty to volunteer information 4.13 75 The duty to answer questions honestly and carefully 4.33 81 Basic requirements: misrepresentation and inducement 4.39 82 Deliberate and reckless misrepresentations: acting without honesty 4.50 84
v Paragraph Page Innocent misrepresentations: protecting the insured who acted honestly and reasonably 4.100 94 Where the policyholder thinks the insurer will obtain the information 4.130 100 A continuing duty of disclosure 4.145 103 Negligent misrepresentations: the remedies 4.153 104 Negligent misrepresentations in life policies: should the law impose a cut-off period? 4.190 112 Renewals 4.205 114 Mandatory rules 4.214 116 Basis of the contract clauses and warranties 4.219 117 PART 5: PRE-CONTRACT INFORMATION AND BUSINESSES: PROPOSALS FOR REFORM 120 Introduction 5.1 120 Retaining the duty of disclosure 5.24 124 Protecting the honest and careful insured 5.31 125 Should the law distinguish between dishonest and negligent conduct? 5.85 136 Contracting out of the default regime 5.109 141 Different rules for different markets? 5.148 150 PART 6: GROUP INSURANCE, CO-INSURANCE AND INSURANCE ON THE LIFE OF ANOTHER 157 Group insurance 6.3 157 Co-insurance 6.42 165 Insurance on the life of another 6.53 168
Page 1 and 2: The Law Commission Consultation Pap
Page 3: THE LAW COMMISSION THE SCOTTISH LAW
Page 7 and 8: vii Paragraph Page Marine Insurance
Page 9 and 10: OUTLINE 1.1 This Consultation Paper
Page 11 and 12: • At present, consumers have a du
Page 13 and 14: • Any warranty should be set out
Page 15 and 16: PART 1 INTRODUCTION OUTLINE OF THE
Page 17 and 18: 1.11 The 1906 Act therefore imposes
Page 19 and 20: (1) The insurer may use warranties
Page 21 and 22: 1.17 When in 1980 the English Law C
Page 23 and 24: 1.28 For most consumers with disput
Page 25 and 26: “Fairness” and reasonable expec
Page 27 and 28: 1.50 The parties should be free to
Page 29 and 30: “Moral hazard” and the need for
Page 31 and 32: 1.71 We think that consumers would
Page 33 and 34: 1.80 We ask what the appropriate re
Page 35 and 36: (2) Appendix B is a report commissi
Page 37 and 38: Although the issues arise under a p
Page 39 and 40: Thus if, when a claim is made, the
Page 41 and 42: 2.21 In both jurisdictions the vict
Page 43 and 44: (2) Before an insurer may avoid a c
Page 45 and 46: Subject to the provisions of this s
Page 47 and 48: Despite some contrary suggestions,
Page 49 and 50: Held covered in case of any breach
Page 51 and 52: (2) The warranty is relevant to onl
Page 53 and 54: 2.61 Classification of the term is
Page 55 and 56:
2.68 Such clauses elevate the answe
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These are often referred to as “c
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2.82 We accept that an exception to
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(d) readily available to any person
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2.101 If the term were not sufficie
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2.111 The law on warranties is simi
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(1) Each proposal form was required
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3.14 TCF is a valuable initiative w
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THE FINANCIAL OMBUDSMAN SERVICE 3.2
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Research project 3.32 When we start
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Case study: clear questions should
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3.43 These examples look only at th
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Warranties of fact 3.50 We did not
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(9) The FOS has more experience tha
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3.63 There might of course be some
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The risk of legal challenge 3.72 We
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(3) BOTH HONESTLY AND CAREFULLY (OR
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4.10 Some consultees have asked how
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4.18 The FOS’s requirement that t
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General questions 4.21 As we have s
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4.32 We provisionally propose that
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4.43 We would also point out that a
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Criminal fraud 4.55 First, some ins
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4.62 We stress this point, because
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4.70 The issue is further confused
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Relevance 4.80 Secondly, our defini
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4.92 However, we are not sure that
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Different ways in which policyholde
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Judging what is “reasonable” fo
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4.121 We ask whether the legislatio
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...the reasonable expectation of th
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4.142 The proposer should take care
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4.154 Few of the legal systems that
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4.162 We accept the first argument
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No reinsurance 4.173 It may occasio
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Effect on future cover 4.183 The fo
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Reactions 4.195 This question excit
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4.206 In Part 3 we identified one p
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Our proposals 4.228 Therefore we pr
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5.5 We have therefore sought soluti
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(2) Similar protections would apply
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(1) The duty of disclosure has beco
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Thus if a business insured ought to
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5.46 On the one hand, it seems righ
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5.57 Insurance law is currently har
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5.67 This is the same rule that we
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5.76 We were told, for example, abo
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5.86 We have already set out our pr
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Proving that an action was delibera
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Cancelling for the future 5.105 We
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(1) The law could allow statements
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5.124 Is one approach better than t
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Controlling the use of standard ter
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However, the provenance of the term
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Reinsurance 5.153 Our starting poin
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5.163 It is important to bear in mi
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5.170 The same issues arise here. A
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PART 6 GROUP INSURANCE, CO-INSURANC
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6.9 There may, however, be cases wh
Page 175 and 176:
6.18 We were told that whatever the
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6.31 There is one question on which
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(1) Where a member has made a delib
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The FOS approach 6.48 In our survey
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6.59 In Part 4 we provisionally pro
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6.73 In business contracts, we prop
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(3) The policy may contain exceptio
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Statements of Insurance Practice 7.
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TREATING CUSTOMERS FAIRLY 7.22 In P
Page 193 and 194:
7.31 Case 14 concerned a critical i
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7.40 Insurers have told us that the
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7.50 Large businesses are more able
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Civil law jurisdictions 7.61 The no
Page 201 and 202:
PART 8 WARRANTIES AS TO THE FUTURE
Page 203 and 204:
Page 205 and 206:
8.24 Although our general policy is
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8.33 It may be helpful to illustrat
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8.41 We have considered whether the
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8.51 For business insurance it is a
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8.62 These provisions require the c
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(1) The protection only applies to
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…subject to any express provision
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8.92 This means that neither the in
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Waiver and affirmation 8.101 The ch
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8.107 Scots law has not developed a
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The implied marine warranties 8.116
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Implied voyage conditions 8.127 The
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PART 9 PRE-CONTRACT INFORMATION AND
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9.6 The issue is far from new. Repo
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THE CURRENT LAW Introduction 9.16 R
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The broker as agent for the insured
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There must be every day thousands o
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(1) on the basis of a fair analysis
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9.47 The problem is particularly ac
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Transcribing information to screen
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9.61 However, the case law suggests
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However, it is not obvious that thi
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Section 19(b) 9.77 We have not rece
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It seems to me, both from a reading
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CONSUMERS - THE CURRENT POSITION In
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9.101 For these types of activity,
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(3) whether the firm has or will pr
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9.118 This was the view taken by a
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Unfortunately, the firm has contemp
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PART 10 PRE-CONTRACT INFORMATION AN
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10.9 Some intermediaries fall outsi
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10.19 We think this is a less attra
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10.25 Insurers may find it more dif
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Completion of proposal forms: the N
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Marine Insurance Act 1906, section
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10.56 The great majority of busines
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10.70 We welcome views on whether p
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Cases brought to the Financial Ombu
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11.18 When we commissioned this mod
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The overall effect 11.27 The model
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11.39 Unlike our other proposals, t
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12.9 Do consultees agree that the d
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12.22 We provisionally reject the p
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Contracting out of the default regi
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Consumer insurance: “joint lives,
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12.68 If the voyage conditions are
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ASSESSING THE COSTS AND BENEFITS OF
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THE STATEMENTS OF PRACTICE 1977 A.4
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Voluntary measures unsatisfactory A
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In such circumstances, it was also
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A.39 In 1984 the DTI put forward a
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GENERAL INSURANCE STANDARDS COUNCIL
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A.63 This report is of particular i
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In order to allow flexibility and t
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A proposed model for assessing the
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Tables & Figures Page Table 1: Illu
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Section 1 Introduction and Terms of
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Section 2 What are the primary chan
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Section 3 Economic incentives in in
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Page 329 and 330:
Section 4 Baseline analysis of insu
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Page 333 and 334:
Page 335 and 336:
Page 337 and 338:
Page 339 and 340:
Page 341 and 342:
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Page 345 and 346:
Section 5 Identification of the pot
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Page 353 and 354:
Section 6 Case Study - Critical Ill
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Page 361 and 362:
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Page 369 and 370:
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Annex 1 References Cockburn, B. (20
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APPENDIX C THE FOS APPROACH TO ISSU
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Table 2: Consumer cases: main infor
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Table 4: Consumer cases: time of no
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C.27 The FOS has explained that in
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Have you any physical defect or inf
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The FOS approach to unclear questio
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Deliberate Customers deliberately m
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C.65 A further complication of the
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I cannot accept that the complainan
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(2) W failed to disclose an eating
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C.89 One problem with relying on om
Page 395 and 396:
When does the FOS apply the consume
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The overall success rate C.107 The
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Institute of Actuaries Healthcare C
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