By Daniel Hunter
Customers taking out insurance products will be given added peace of mind that their claims will not be declined if they unknowingly fail to disclose information to their insurer under the new Consumer Insurance Act, which comes into force on 6th April.
The Act formalises existing industry best practice to ensure that insurers ask specific questions about information they need to know.
“We want customers to take out insurance policies with the confidence that they are covered. By placing a legal duty on insurers to ask customers all relevant questions at point of sale, people will know exactly what they need to disclose upfront," the Association of British Insurers said in a statement.
“This Act reflects steps taken by the industry over the years to improve customer awareness of what they need to tell their insurer. For example, the ABI Code of Practice for life, critical illness and income protection insurance, which helped reduce the number of claims declined for non-disclosure.”
The ABI published guidance on dealing with non-disclosure on long term protection products in 2008 and this became a condition of membership. As a result, the percentage of life, critical illness and income protection claims declined for non-disclosure fell from 8% in 2007 to 2% in 2010.
The Consumer Insurance Act will:
· Place a duty on insurers to ask customers all relevant questions about the specific information required at point of sale
· Provide legal protection for customers that claims will not be declined for non-disclosure unless information is deliberately or carelessly withheld or misleading
· Apply to all personal insurance, such as home, car and travel insurance, life, critical illness and income protection insurance, health and pension annuities.
· Apply no matter how insurance is purchased, be it online, by telephone or face to face.
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