Insurance Law Reform: Status Of Intermediaries

The Law Commission has published a policy statement on the

status of intermediaries when obtaining and passing pre-contract

information from consumer to insurer. The issue is important

because it affects the remedies available to the insurer where the

intermediary misrepresents or fails to disclose matters that are

material to the risk. The present legal position, based on the law

of agency, is that the intermediary normally acts for the insured

and in such circumstances the insurer may be entitled to avoid the

policy on the grounds of misrepresentation/non-disclosure.

The Law Commission has proposed a new statutory code for

identifying for whom the intermediary is acting when obtaining and

passing pre-contract information to the insurer. It is intended

that this will be a free-standing code in a Bill on pre-contract

information in consumer insurance to be published later this year.

The proposals are intended to shift the emphasis from the

intermediary normally acting for the insured and to strike a

balance: insurers should bear responsibility for intermediaries

within their control but not for the actions of genuinely

independent agents.

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Full Article

As part of its ongoing review of insurance contract law, the Law

Commission has recently published a policy statement on the status

of intermediaries when obtaining and passing pre-contract

information from consumer to insurer. The Law Commission is

drafting a Bill which will be ready later this year based on the

policy statement.

The policy statement follows on from the Consultation Paper

published by the Law Commission in July 2007 on the reform of

insurance contract law and the summary of responses relating to

consumer insurance published in May 2008. To read our Law-Nows on

these publications please click below:

Insurance/PI: Proposed insurance law reforms

Proposed insurance law reforms: brokers, insurers' agents and

other intermediaries

Despite the reform proposals the Law Commission is suggesting to

a consumer's duty of disclosure, the question whom an

intermediary acts for will still be important where that

intermediary acts negligently or dishonestly in obtaining or

transmitting pre-contract information and the insurer purports to

avoid the policy on the grounds of misrepresentation and/or

non-disclosure.

If the intermediary is held to be acting for the insurer at the

time then the insurance cover will not be affected. However, if the

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