Law Commission proposals for a five-year non-contestability period on life insurance have been slammed by the Association of British Insurers.
The ABI says reforms proposed in the Law Commission’s insurance contract law consultation paper are costly and unnecessary as they are already standard industry practice.
The Law Commission says reforming the Marine Insurance Act 1906, which enables insurers to throw out claims on the grounds of non-disclosure, even if accidental, would give better consumer protection.
But ABI director general Stephen Haddrill says FSA regulation prevents insurers being heavy-handed while consumers also have recourse to the Financial Ombudsman Service.
Lifesearch head of protection strategy Kevin Carr says the proposals are sensible and the ABI is wrong to suggest “all is rosy in the garden”.
He says: “The FOS overturns the decision around 70 per cent of the time, which suggests insurers are getting it wrong 70 per cent of the time.”
The Law Commission also proposes that insurers should remain protected from fraudulent claims but pay out proportionately for negligent non-disclosure.