MSE News: Call for insurance law reform

Former_MSE_Guy

This is the discussion thread for the following MSE News Story:

"A host of experts are calling for a change to rules on what consumers must disclose to prevent unfair claim rejections ..."

Read the full story:
Call for insurance law reform

ashcarrot

A maximum time to payment from claim too. < 28days.

RichBen

There is already a requirement for insurers to settle a claim "without unreasonable delay" once a settlement is agreed. It is generally the agreement of the settlement that takes the time and this is often down the the claimant as much as the insurer.

On the disclosure issue, I completely agree with the need for change. As an insurance adviser I have a legal duty to point out the duty of disclosure to all clients, what non disclosure might mean for them (claims not met etc) and, cruicially, what might constitute non disclosure of a material fact. Very often clients do not understand what this means and even after explaining, quite naturally, possibly important information "escapes their memory".

The Law Commission has been looking at altering the duty of disclosure so that insurers must ask all the questions they want answers to. At least this would shift the balance of power a little.

Housewife2010

Insurance Law definitely needs reforming. Insurance companies should be made to declare the following information every time they sell insurance to anybody - since these are 'material facts' from the point of view of the consumer:
- the number of insurance claims presented to the company
- the number of claims taken to the Financial Ombudsman by dissatisfied consumers over the same period,
- the percentage of these claims that the Ombudsman subsequently rules on in favour of the consumer.

I have just had the Financial Ombudsman find in my favour against Halifax Home Insurance, but it has taken 2 and a half years for my case to be 'processed' ('due to the excessively high number of complaints they are currently receiving') and we are still arguing over the settlement.
I think the Financial Ombudsman should also fine Insurance Companies for wasting everyone's time with unjust claim rejections, and fine them punitively - an amount large enough to make the FD and MD feel a level of impotence, stress and anger equivalent to that they cause the consumer by their continual denial of a valid claim.

Remember Insurance Companies are not there to protect you, help you or be your friend when you need them. They exist solely to make money for themselves, and they maximize this by finding every possible way not to pay out.

dacouch

They are good points Housewife2010 however I suspect if the facts you requested were pointed out to customers then a significant amount of consumers would still buy the cheapest policy even if the facts you wanted showed the Insurer have a bad claims handling history. There are of course people who would find them very interesting typically people who have already had a bad experience from an Insurer.

I definately agree that if you Insurers were fined enough to make the FD and MD impotent it would certainly improve their claims performance but possibly not there performance away from business life

RichBen

Further to my post yesterday, having considered further, the need for legal reform may still be there, but all insurers in the UK are regulated by the FSA and the rules state that it is unreasonable for an insurer to reject a consumers (not a business) claim on the basis of:

• non disclosure where the policyholder could not be reasonably expected to have disclosed the material fact
• non negligent misrepresentation of a material fact
• breach of warranty or condition where circumstances of claim are not connected with the breach

Whilst this still leaves some areas for discussion, it does assist the consumer. The reason this didnt apply in the orginal case cited by Martin is that it was a "pure protection" policy to which these rules do not apply. However, this principle will apply to all general insurance contracts like home and motor. Keep in mind in case you have a claim rejected. Even better - use a quality broker who will ensure that your rights are upheld in situations like this.