What the Consumer Insurance Reforms Mean for You

What the Consumer Insurance Reforms Mean for You

by Rebecca Hall on 30 Jun, 2011

The government has announced that it plans to take forward the recommendations made by the Law Commission and Scottish Law Commission in their 2009 report Consumer Insurance Law: Pre-Contract Disclosure and Misrepresentation. What are these reforms and what do they mean for you?

Put simply, should the reforms go through, as looks likely, the onus is shifted from the consumer to provide all the requisite information onto the insurer to ask all the relevant questions. Current consumer insurance law dates back to 1906 and has only been subject to additional layers of regulation that many say have served only to further complicate matters.

Thanks to the archaic law, insurance companies have been well within their rights to turn down insurance claims that have had information left out or misrepresented. This is designed to the protect the insurer from false claims, but has notoriously led to many consumers not receiving payouts on genuine claims due to honest errors.

By shifting the onus on the insurance company, the process will be made much simpler, and rejections based on missing information or improperly completed paperwork will be much far less common, as it will be the insurers responsibility to ensure they obtain the proper information from you, rather than your responsibility to provide it. This subtle distinction should spell the end of consumer frustration with and distrust of the insurance industry.

The move has been welcomed by consumers and insurers alike, who look forward to a new era of trust between the two camps. Consumers are hopeful that this will spell the end of rejected genuine claims and insurers are optimistic that the increased trust will stop consumers seeing insurance companies as organisations to justifiably ‘get one over’ on.

The reforms have not be enshrined in law as of yet, but with all parties enthusiastic about the changes, it’s highly unlikely they will be batted down in either the Commons or the Lords, meaning it is only a matter of time before this simpler, more consumer-friendly legislation is on the books.

About the Author

Rebecca Hall


Rebecca Hall worked as an independent mortgage adviser for 10 years before turning to financial journalism full time. She has strong links to the CAB advising families on mortgage refinancing.