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

OUTLINE
1.1 This Consultation Paper examines three areas of insurance contract law:
• misrepresentation and non-disclosure by the insured before the contract
is made;
• warranties and similar terms; and
• cases where an intermediary was wholly or partially responsible for
pre-contract misrepresentations or non-disclosures.
1.2 A more comprehensive summary is available on our websites at
http://www.lawcom.gov.uk and http://www.scotlawcom.gov.uk. Here we list
some of our main provisional proposals and indicate where to find more
information about them in the Consultation Paper.
THE NEED FOR REFORM
1.3 Insurance contract law is partly set out in the Marine Insurance Act 1906. This
Act incorporates general principles of insurance law and has been held to apply
to all forms of insurance contracts, not simply to marine insurance. However, it
has not kept pace with the times and can produce results that fail to meet the
expectations of the market.
1.4 Consumers have a degree of protection against the strict effects of the law:
• Insurers issued Statements of Practice in which they agreed not to rely on
their strict legal rights in some circumstances. These have been withdrawn
but remain influential.
• The Financial Services Authority (FSA) adopted the substance of some of
these Statements into its rules regulating the conduct of insurance
companies.
• The Financial Ombudsman Service (FOS) provides a dispute resolution
service to consumers and small businesses, which makes decisions on the
basis of what is “fair and reasonable”. When deciding what is “fair and
reasonable” the FOS often uses the Statements of Practice as guidance.
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