What insurance law reform means for you

October 10th, 2019

Follow our guide on the recent changes to insurance law which provide consumers with better protection.

The new law now lays the responsibility on insurers as opposed to policyholders to ensure accurate information is provided for quotes. The Consumer Insurance (Disclosure and Representations) Act 2012 came into effect on 6th April 2012 to ascertain this shift in responsibility.

Before the passing of this Act, if you took out a homeinsurance, critical illness, life insurance, medicalinsurance, car insurance,travel insurance or policy, it was necessary to give all information that might be relevant to making a claim, should the need arise. In the event you failed to do so, and your insurer found the missing details had been relevant, your insurance policy could be void and any claims rejected.

Policy questions

The new legislation has been welcomed by the Financial Ombudsman Service (FOS), which tackles disputes between insurers and policyholders. They state that ‘consumers can now have more confidence when taking out an insurance policy.’

A large proportion of insurance claims have been turned down because people failed to mention factors that insurers considered to be relevant to a potential claim, according to the FOS. Three common reasons for rejecting a claim include failing to disclose:

  • A previous driving conviction which may even include fixed penalty fines
  • A medical condition, including childhood ailments
  • Anyprevious accidents, even if these did not lead to a claim for loss.
An end to vague questions

The new law requires insurers to ask you relevant questions rather than a list of hazy enquiries with vague or generic terms. Many of these referred to whether you had any problems withyour heart, back oreyes for instance.

These type of questions neglect individual circumstances and fail to take into account the average person lacks expert knowledge in the effects one medical condition can haveon another.

A law favouring consumers

Until April 2012, insurance law was formulated on the Marine Insurance Act of 1906. This legislation actuallypenalisedanyone who did not have the foresight to submit allthe information required that was subsequently required by the provider.

As policies for those seeking car, critical illness or travel insurance didn’t exist at the time of the Act of 1906, it wasnot intended for such purposes. In those Edwardian days, it was the City people who were looking to close shipping deals under the auspices of Lloyds of London to whom the act was mainly projected.

The recent 2012 Act will afford protection to people purchasing an insurance policy from an insurer, either via a broker or through a comparison site. The information you submit must be accurate but it is now up to the insurers and brokers to requestcorrect information from you that is required in order to give you a quote on a policy.

If a dispute should arise, customers can still take their case to present to the Financial Ombudsman Service.

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