The Consumer Insurance (Disclosure and Representations) Act 2012 has received its royal assent and will come into force next year.
The act will establish a statutory code to determine for whom an intermediary (an agent or broker) acts when arranging insurance.
If the intermediary is an appointed representative of the insurer, or is acting as the insurer's agent, they will be considered as acting for the insurer.
In all other cases the intermediary will be presumed to be acting for the consumer.
The act concerns what a consumer must tell an insurer before entering into or varying an insurance contract.
It abolishes the consumer duty to volunteer facts and requires consumers to take reasonable care to answer insurer questions fully and accurately. Any information that is volunteered must not be misleading
The law will also limit the insurer's remedies where there has been a misrepresentation. Where they have entered into a contract through misrepresentation remedies will depend on "all the relevant circumstances": If the misrepresentation was honest and reasonable, the insurer must pay the claim.
