Campaigners call for insurance law reform

14/12/2009

A draft parliamentary bill could lead to the finances of thousands of customers being improved, if it achieves a change in legislation relating to customer disclosure on insurance applications.

The bill, which is backed by the Law Commission and the Association of British Insurers (ABI), reinforces protections for applicants in cases of human error, the BBC reported.

Under current UK law, consumers are obliged to disclose various facts which could have a bearing on future claims - such as putting whether or not they have smoked recently on a life insurance application.

However, this can lead to payouts being refused if a customer makes a genuine mistake such as ticking the wrong box.

Speaking to the broadcaster, Law Commissioner David Hertzell said: "[Customers] simply do not know what factors the insurer will take into account when writing that risk, so it is easy for them to make a mistake and have their policy invalidated."

Nick Starling, a spokesman for the ABI, added: "Insurers pay out huge amounts of money … Clearly with all these claims things are sometimes going to go wrong. Everyone regrets that, no-one wants that to happen."

Around £57 million is thought to be paid out in general insurance claims in the UK each day.

The legislation, if adopted, will affect England, Wales and Scotland.

Tags; Budgeting Advice, Young Family Finances, Retirement Money Problems, Credit Card Lifestyle, Recent Graduate Debt,

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