While no fixed decisions have been reached, the Law Commission has published an “Issues Paper” on the subject of “Misrepresentation and Non-Disclosure” which includes various tentative conclusions and proposals. The Issues Paper is designed to stimulate debate. – visit www.lawcom.gov.uk.Insurers have reacted to the publication in many ways. Some argue that the changes proposed are needed to build confidence in our market. Others suggest that many of the recommendations are already in place, albeit on a voluntary basis. Others apparently do not see the need for change. What I am certain of is that we could all benefit from clarity, and it is the Law Commission’s view that this will best be dealt with by statute. Fundamental changes are proposed, and it is in the interest of all those active in the protection market to understand them. The authors’ view is that the basis of “utmost good faith” in insurance has developed unevenly, and there is confusion around non-fraudulent misrepresentation and non-disclosure. The proposed remedy is to shift the onus from customers having to make full disclosure, to the insurer having to collect all the information it deems relevant. Practically speaking, when it is obvious that a customer has been unable to answer a question fully and where an insurer has collected consent to collect a GPR, then the customer should be able to rely on the insurer collecting the additional information from the GP, if it deemed it necessary. If the insurer does not collect the information, then it will have waived its right to such information. The Issues Paper also proposes this “waiver” will be deemed to be in effect if the insurer fails to ask a specific question about a particular matter it would want to use when considering a claim. It says that where a material fact is not disclosed by the customer, it would be for the insurer to show that the customer appreciated the significance of the fact, or that a ‘reasonable insured’ would have. Even where an insurer can show negligent misrepresentation by the customer, they may still be obliged to make a proportionate payment, excepting only where such a disclosure would have meant the specific element of cover would have been excluded or that cover would have been declined altogether. So what will all this mean? If these changes come about insurers will have to pay more claims, which means they will increase premiums to cover their costs. Best guesses today peg these at about 15 to 20 per cent. While there are some downsides to such a move in price, the longer I think about this, the more I am inclined to believe that, overall, it would be a good thing. I expect we will also see longer application forms and insurers are bound to ask for more GPRs, which will slow the application process. Life companies are likely to follow their GI counterparts in developing a register of claimants, probably with attaching reference to any associated broker as they look for the possibility of intermediary influenced behaviour. The changes will lead to increased non-disclosure and, inevitably, to an improvement in our market’s reputation – but this will take time. Richard Verdin is sales and marketing director at Direct Life & Pensions
The Association of Mortgage Intermediaries has launched a factsheet to help members deal with the issues around retention business.The factsheet covers compliance issues when reviewing existing mortgage arrangements and additional issues that will be raised where a client has an existing unregulated mortgage. AMI associate director Rob Griffiths says: “As a growing number of lenders […]
The Council of Mortgage Lenders was at the centre of proceedings this week after its attack on Home Information Packs.
Building societies Annie Shaw looks at the future for the mutuals in the home loan market following a wave of mergers
Falcon parent Sumus has announced the appointment of Andrew Snowball as non-executive director.Snowball will remain as commercial director of Financial Services Advice & Support Limited, which was acquired by Sumus in September for £2m.Snowball says: “Becoming part of the Sumus group was a major strategic step for FSAS and I am delighted to be invited […]
Watch Felix Wintle, head of US equities at Neptune, discuss why he believes US equities are in a structural bull market and the key factors that can drive the S&P 500 higher.
In the video, Wintle addresses the following:
• The US market and why — despite equities rising from 2009 — he believes the structural bull market only started in 2013
• Key economic and corporate factors that can drive the S&P 500 higher
• Investment themes and sectors offering exposure to the domestic recovery
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