Law Commission proposes changes to 1906 law
United Kingdom insurers may be faced with higher claims due to a legal reform coming from Britain’s Law Commission. The commission has announced that a 1906 law which deemed a company’s insurance coverage invalid if they did not voluntarily offer up information when taking out new policies has had unintended side effects in the insurance industry. According to the Law Commission, the law enabled insurance companies to avoid playing claims due to technicalities, a problem that may be changed with upcoming reform.
Insurance industry has benefited too much from “outdated” law
The Law Commission is looking to make a change to the 1906 law that would put both businesses and insurance companies and even ground in terms of claims. The reform would provide insurance companies with access to information provided by a business concerning the risks from which they wish to be protected. Insurers would then be fully responsible with finding out any additional information that could affect coverage in any way on their own.
Reform could put insurance companies and businesses on even ground
The call to reform the alleged outdated law comes in the wake of reporters concerning the weak performance of the UK insurance market recently. As insurers find it more difficult to make money, they begin looking for ways to minimize their financial losses, especially in the realm of claims. According to a report from insurance consultancy firm MacTavish, 11% of the UK’s corporate insurance buyers have had a claimed challenged over the past two years on the grounds of information not being voluntarily provided. The report suggests that these challenges are being issued against claims which insurers would have otherwise being held accountable for.
British insurance industry warns of consequences of legal reform
The Association of British Insurers claims that any reform to the law could have far reaching and serious consequences on the commercial insurance market. The Law Commission is currently examining the potential effects of legal reform in the hopes of avoiding any dire complications being levied against the country’s insurance industry.