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

4.18 The FOS’s requirement that the insurer should not rely on a consumer proposer
to volunteer information is similar to the law in all the continental jurisdictions that
we have looked at. For example the French Code des Assurances, 9 the
Norwegian Act relating to Insurance Contracts of 1989 10 and the Swedish
Insurance Contracts Act of 2005 11 all state that the proposer need provide
information only if requested to do so by the insurer. The same is true of the bill
to reform insurance contracts law currently being considered by the German
parliament, 12 and we understand it also to be the approach taken by the
European Restatement Group. 13 New York law has removed the duty of
disclosure except for marine insurance and reinsurance. In Australia the proposer
remains under a duty to disclose what a reasonable person would think was
relevant to the insurer, 14 but only if the insurer has clearly informed the insured in
writing of the general nature and effect of the duty of disclosure. 15 Further, for
most consumer contracts the duty is confined to matters that could not
reasonably have been made the object of a specific question and applies only if
the insurer expressly requests disclosure of exceptional circumstances. 16
4.19 One difference should be noted. Many of the continental Acts do provide that the
proposer does have a duty to disclose, without being asked, facts that they
actually know would be decisive or relevant 17 to the insurer. 18 For example, the
Norwegian legislation provides that:
9 Code des Assurances, Art L 113-2-2. A general duty of disclosure in insurance was
abolished by Loi No 89-1014 of 31 st December 1989.
10 Insurance Contracts 1989, s 4-1.
11 Swedish Insurance Contracts Act 2005, Chapter 4 s 1.
12 Draft of December 2006, s 19(1). See
http://www.gdv.de/Hauptframe/index.jsp?oidl1=11338&oidl2=13346&oidl3=13348&content
Url=/Themen/Recht_und_Gesetz/Hintergrundinformationen/inhaltsseite230.html (last
visited 18 June 2007). An earlier draft of March 2006 is discussed by G Rühl, “The Single
European Market for Insurance” [2006] 55 ICLQ 879.
13 See above, para 1.84. The Group presented some draft proposals at a seminar organised
by BILA on 25 May 2007. We are most grateful to Professor Helmut Heiss for providing us
with further information.
14 Insurance Contracts Act 1984, s 21(1)(b) [or what the proposer knows to be relevant, s
21(1)(a)]. For further discussion, see R Merkin, Reforming Insurance Law: Is there a Case
for Reverse Transportation? The Australian Experience of Insurance Law Reform,
available from our website on http://www.lawcom.gov.uk/docs/merkin_report.pdf.
15 Insurance Contracts Act 1984, s 22; the insurer who has failed to do this may not exercise
a right in respect of a failure to comply with the duty unless the failure was fraudulent: s
22(3). The form of the notice is now specified in regulations.
16 See para 4.25 below.
17 The systems seem to vary as to this requirement.
18 New York law also renders the contract void in cases of “fraudulent concealment”, but
traditionally only in the cases of life or fire insurance. There are dicta suggesting that the
fraudulent concealment rule may now be of general application: The Home Insurance
Company of Illinois (New Hampshire) v Spectrum Information Technologies, Inc 930 F
Supp 825 (1996 US Dist Ct) (LEXIS 12849), para A.5.
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