Hansard

Insurance

Volume 931: debated on Wednesday 4 May 1977

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Mr. Ward

asked the Secretary of State for Trade if, in view of the proposed exclusion of insurance contracts from the Unfair Contracts Terms Bill, he will make a statement concerning the protection afforded to insurance policy holders from unfair treatment as a result of the terms of insurance contracts.

Mr. Clinton Davis

In general I consider that the insurance industry has a good record in treating policy holders fairly. But, in view of the proposed new legislation on contract terms in other fields, I asked the British Insurance Association and Lloyd's to consider drawing up a statement of practice in the field of personal non-life insurance to cover certain matters. I welcome the fact that the BIA and Lloyd's have now drawn up the following statement of insurance practice which they are recommending to their members:

"Statement of Insurance Practice

This Statement is restricted to non-life insurances of policyholders domiciled in the UK and insured in their private capacity only

1 Proposal Forms

  • (a) The declaration at the foot of the proposal form should be restricted to completion according to the proposer's knowledge and belief.
  • (b) If not included in the declaration, prominently displayed on the proposal form should be a Statement:
  • (i) drawing the attention of the proposer to the consequences of the failure to disclose all material facts, explained as those facts an insurer would regard as likely to influence the acceptance and assessment of the proposal;
  • (ii) warning that if the proposer is in any doubt about facts considered material, he should disclose them.
  • (c) Those matters which insurers have found generally to be material will be the subject of clear questions in proposal forms.
  • (d) So far as is practicable, insurers will avoid asking questions which would require expert knowledge beyond that which the proposer could reasonably be expected to possess or obtain or which would require a value judgment on the part of the proposer.
  • (e) Unless the prospectus or the proposal form contains full details of the standard cover offered, and whether or not it contains an outline of that cover, the proposal form shall include a statement that a copy of the policy form is available on request.
  • (f) Unless the completed form or a copy of it has been sent to a policyholder, a copy will be made available when an insurer raises an issue under the proposal form.

    • 2 Claims

  • (a) Under the conditions regarding notification of a claim, the policyholder shall not be asked to do more than report a claim and subsequent developments as soon as reasonably possible except in the case of legal processes and claims which a third party requires the policyholder to notify within a fixed time, where immediate advice may be required.
  • (b) Except where fraud, deception or negligence is involved, an insurer will not unreasonably repudiate liability to indemnify a policyholder:
  • (i) on the grounds of non-disclosure or misrepresentation of a material fact where knowledge of the fact would not materially have influenced the insurer's judgment in the acceptance or assessment of the insurance;
  • (ii) on the grounds of a breach of warranty or condition where the circumstances of the loss are unconnected with the breach.

    • The previous paragraph does not apply to Marine and Aviation policies.

    3 Renewals

    Renewal notices should contain a warning about the duty of disclosure including the necessity to advise changes affecting the policy which have occurred since the policy inception or last renewal date, whichever was the later.

    4 Commencement

    Any changes to insurance documents will be made as and when they need to be reprinted, but the Statement will apply in the meantime.

    5 EEC

    This Statement will need reconsideration when the EEC Contract Law Directive is taken into English/Scots Law."

    The Chairman of the Life Offices' Association has also written to me, on behalf of the three Life Associations involved, to express their willingness to consider drawing up within the next few weeks a parallel statement of practice relating to life assurance.