Hurrah. Government sides with consumer over insurance companies. Ish.
No one likes insurance. At best you are paying for something you don't need, at worst, something bad has happened. But worse than worst is when something bad has happened, and your insurance company refuse to cough up.
Currently, the law governing the purchase of insurance, which has not been updated for over 100 years, requires that you tell the insurance company everything they need to know. Whether they ask you or not.
The new rules propose that it will now be the responsibility of insurers to ask particular questions to obtain all of the information they need, not for consumers to second guess, or simply forget to mention something that might be relevant because they weren't specifically asked.
The new rules, put forward by the Law Commission and the Scottish Law Commission in their 2009 report, aim to prevent valid claims from being turned down because consumers unintentionally gave the wrong information, although people who deliberately mislead insurers will still have their claims rejected. Obviously.
The Law Commission estimated that if the legislation was passed it would mean that insurers could pay out £4.4 million more for life claims, and between £5 million and £20 million more for other policies, athough the Association of British Insurers thinks this is overstated.
However, before you get too excited, Financial Secretary to the Treasury Mark Hoban specifically said: “I am pleased to announce that having considered the response to the Treasury’s targeted consultation on the Consumer Insurance (Disclosure and Representations) Bill, the Government has decided to take forward the proposed reforms, when Parliamentary time permits" so although the Government agree with the changes in principle, they can't actually be bothered to anything about it just yet.
Looks like the insurers have got a bit more time to deny claims and to draw up the inevitable interminable list of questions that will now be asked every time you take out an insurance policy. Sigh.