Insurers must be fairer on illness claims

Plans have been put forward by The Law Commission, which monitors the way laws are applied, that would mean insurers are no longer able to reject claims because insufficient information wasn’t given when the insurance was taken out.

Those who are critically ill who are denied payouts by insurers could benefit from a vital amendment to the law. The current law which dates back to 1906 means that anyone claiming will have their medical history scrutinised by the insurer. If it is revealed that any detail was not made evident, the insurer has the right to reject the claim. However, innocent mistakes or oversights are common when applying for insurance.

Currently, those who have had a claim denied can appeal to the Financial Ombudsman Service. This organisation is apt to take the policyholder’s side if they have application questions were answered truthfully. For instance, when an insurer asks for details of any condition affecting the nervous system, failure to not state something like an occasional lack of feeling in their leg because they didn’t think that it was appropriate is expected to be backed by the Financial Ombudsman Service.

The new law means insurers must ask for precise medical and lifestyle details if they want to then use information as a basis for rejecting claims.

The changes would also have implications on other kinds of insurance. For example, when renewing car or home insurance, insurers must ask policyholders about changes to their current situation that could affect the policy.

A spokesperson for the Law Commission commented that insurance law must be updated. However, a spokesperson for the Association of British Insurers remarked that insurers will resist these changes.

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