Insurance cover could become fairer

New regulations and changes to the law could result in greater fairness for consumers that have various types of health insurance cover, as it means that there will be less of a chance of the insurance company being able to deny the claim.

In the past a number of insurance companies have been slated for denying claims from policyholders because of information that was or was not given at the time that the policy was taken out, leaving the policyholder with no way to claim on his or her policy.

Plans have been proposed by the Law Commission, which looks at the way that laws are applied in cases such as these, and if everything goes through successfully it means that insurance companies will not be able to refuse to payout on a claim because of lack of information provided when the policy was taken out by the claimant. Life and critical illness insurance policyholders may benefit the most, as the level of denied claims in these areas is quite high.

One spokesman from the Law Commission 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.’

However, insurance companies plan to fight against the changes. According to an official from the Association of British Insurers: ‘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.’

Tom Smith
26th July 2007

Tags: policy, Insurance, changes, consumer, holders, companies, health