Fish hooks in Insurance contract law review

In October last year we examined the Insurance Contracts Bill and its possible impacts on the application process for advisers – although it is largely benign for most of you as you tend to offer fully underwritten cover, this quarter we examine how it may affect certain disputes.

That may have more of an impact on product design, and perhaps, on how you advise your clients. We contacted the Insurance and Financial Services Ombudsman Scheme for more details on the impacts that they are expecting if the bill passes in its current form, who were kind enough to give us an indication of the areas where we might expect the greatest change in how disputes might be handled. IFSO has been a supporter of change in this area for more than 20 years and identified the following as areas where they view possibly unfair terms lurking in contracts:

• Incorrect statement in the application
• Broad Pre-existing Conditions exclusions
• Unreasonable claim notification periods
• Unilateral changes to policies

Incorrect statements is an area which we dealt with in some detail in the last article. Most fully underwritten products would probably not struggle with new requirements as they are highly likely to meet requirements in the new law for clearly stating the importance of disclosure and having good, clear, question sets. If they do not already, they have good scope to meet these requirements.