Customers who have accidentally failed to disclose information to their insurance companies will now be protected after a reform in a hundred-year-old insurance law.
UK consumers, along with health charities, insurance experts and Which? are celebrating today after it was announced that an archaic insurance law is to be reformed. The bill was introduced in the Lords today under a new procedure for uncontroversial Law Commission Bills and is expected to be passed with no objection.
The Marine Insurance Act, written in 1906, was designed to be used for negotiations between two expert parties. However, it is also applied to cases where a consumer is sold insurance by a company.
The law currently puts the onus on the insured party to disclose all necessary information, which led to numerous unfair situations in which consumers would not receive a payout because they had not disclosed information that they thought was irrelevant.
Health insurance reform
Under the old law someone might claim on their health insurance after discovering they had leukaemia but have their claim denied by the insurance company because they failed to disclose an unrelated ear infection they had three years ago.
Under the reformed consumer insurance law, the onus will now be on insurance companies to ask consumers the right questions before they sell a policy. Consumers will be expected to take reasonable care not to make mistakes, and will still be refused a payout if they’re found to have lied.
A victory for consumers
Which? has been campaigning on reforms to this law for years. Lucy Widenka, senior advocate at Which? said:
‘It is great news that this legislation is finally being brought into the 21st Century. To have a situation where people are relying on an insurance law that is over a hundred years old and was never intended to cover consumers is an absurd and potentially damaging situation. Which? has been part of a collective voice of consumer organisations, health charities and lawyers who have long campaigned for this change.’
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