Law Commissions proposals would bring greater clarity to policyholders

Airmic has welcomed Law Commission plans to reform the way insurance is governed in the UK.

The association said the proposals would bring clarity, giving policyholders greater certainty of cover. It will also, they believe, redress the balance between insurers and their customers and support London’s place as the world’s main insurance hub.

The proposals would replace the Marine Insurance Act, the 100-year-old measure that provides the legal framework for all general insurance conducted in the UK. They seek to clarify the duties and responsibilities of buyers, insurers and brokers.

“Our starting point is that the law should strike a fair balance between the interests of insurers and policyholders, and the Law Commission proposals take a big step in the right direction,” said Airmic insurance steering group chairman Kip Berkeley-Herring.

Among the changes of particular interest to Airmic were the concepts of a “reasonable insured” and “reasonable expectation of the insured” plus a move away from implicit warranties. Under the new proposals policyholders who have behaved “reasonably” would be protected even though they may have failed to grasp the legal nuances of the small print.

“We believe the proposals take us beyond contract certainty and move us towards the position that Airmic desires of contract clarity,” said Berkeley-Herring. “Our only concern is that past attempts at reforming insurance law have come unstuck. This time we hope and expect to see change become a reality.”