Munich Re has expanded on recent analysis of non-disclosure and its implications and will reflect insurers' strength on this issue in its contract terms.
Having concluded it was possible to accurately calculate that around one in seven claims arise following deliberate and dishonest non-disclosure at application stage it has taken the issue to its insurers and advisers.
A recent series of seminars found 77% of delegates believe the current ABI code on Misrepresentation and Treating Customers Fairly (TCF) did not genuinely treat all customers fairly.
However, Helen White, head of protection policy at the ABI, said: "Criticising or changing the code will not solve the problem, as the real issue is the small minority of customers that feel it is ok not to tell the truth when applying to buy insurance.
"Withdrawing the ABI code would risk damaging industry reputation".
Claiming a broad agreement that the main industry focus should be on increasing the amount of evidence obtained during the underwriting process, Munich Re said, insurers should expect to see more variance in Munich Re's terms to reflect their underwriting strength.
Lee Lovett, head of business development at Munich Re concluded that now the costs of non-disclosure had been quantified, the challenge was for insurers to reconsider their underwriting strategy if they want to enhance their market share and protect their profit margin. Doing nothing was not an option.
Insurers have ability to use AI, but often choose not to
Leading With Distinction