UK consumers that have insurance policies such as critical illness cover and life insurance cover could soon be enjoying increased fairness as a result of new regulations that could mean that insurance companies will not be able to deny claims as easily as they have been able to in the past. Insurance companies have come under fire in the past because they have denied claims on this type of cover because of information that they claim was not given at the time of applications, and this has left many claimants high and dry when it comes to making a successful claim on a policy that they have been paying the premiums on.
The Law Commission is dealing with the proposed new regulations, which could see UK insurance customers get a far fairer deal. As a result of these new regulations, insurance companies offering cover such as life and critical illness insurance will no longer be able to turn down claims so easily. At present the number of claims that are turned down on critical illness and life insurance policies is quite high, and regulators want to see consumers being treated far more fairly by the insurance industry.
The insurance industry is not best pleased with the plans, and officials claim that insurance customers are not treated unfairly.
Officials from the Associations of British Insurers stated: ‘In effect, our members are operating to these standards anyway and are not forcing claimants to go to the Ombudsman needlessly. Many insurers have already made clear that they will not decline critical illness or life claims when the information that was not disclosed has nothing to do with the final claim.’
However, an official from the Law Commission has stated: ‘We have sought to bring insurance law up-to-date to reflect the reasonable expectations of insurers, policyholders and intermediaries. Our overriding objective has been to achieve fairness between both parties to an insurance contract, while recognising different levels of information about the insured risk and different bargaining strengths.’
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