Customers will no longer have to disclose information to insurance companies when setting up a policy, under major new plans by the Law Commission.

The commission could abolish the duty of disclosure, at least for con- sumers, as part of proposals to overhaul current insurance contract law.

In its first 'issues' paper, on misrepresentation and non-disclosure, the commission proposes to replace the insured's duty to disclose information with a duty on insurers to ask specific questions.

In relation to misrepresent- ation, the Law Commission has suggested that the test for materiality would be based on the "reasonable insured" rather than the "prudent insurer".

Peter Tyldesley of the Law Commission, told a seminar organised by law firm, Beachcroft, that the current legal position was untenable, because different rules were being applied by the courts, under the FSA rules and by the Financial Ombudsman.

The issues paper invites further comments from the industry with a second paper on warranties expected in November 2006. A final report and draft Bill is suggested for 2010.