Lea Brocklebank considers how Law Commission proposals could affect insurance contract law
T he joint consultation paper issued by the Law Commission and the Scottish Law Commission on insurance contract law invited responses by 16 November 2007. The consultation paper, Contract Law: Misrepresentation, Non-disclosure and Breach of Warranty by the Insured, proposes different reforms for consumer insurance and business insurance with a default regime for business insurance contracts based on accepted good practice which would apply in the absence of an agreement to the contrary.
For consumers, the proposals include: replacing the insured’s duty to disclose information with a duty to answer questions honestly and reasonably; introducing a test for materiality based on the “reasonable insured” rather than the “prudent insurer”; the introduction of new remedies that would be proportionate to the situation; and a change in the remedies for innocent and negligent representation.
In relation to the consumer’s duty to volunteer information to the insurer about anything that would influence a prudent underwriter’s assessment of the risk, the proposals replace this so that instead, the consumer would have to act honestly and take
