Insurance law reform

The Law Commission has been working for the last three years on updating insurance law to the modern world.

The latest consultation paper included the following suggestions:

Damages for late payment

Under English law, an insured is not entitled to damages for any loss suffered through delay in receiving payment of a valid claim. This differs from the law in Scotland, and appears increasing anomalous. It sets out proposals for reform.

Insurers’ remedies for fraudulent claims

The law on this issue is convoluted and confused. It proposes that fraud should not avoid the contract from the start; instead the fraudster should forfeit the whole claim and all subsequent claims. In some circumstances the insurer should be entitled to claim damages from a fraudulent insured for investigating the claim.

Insurable interest

There is strong support for retaining the principle of insurable interest for all types of insurance. For indemnity insurance it propose to replace the mix of archaic statutes and common law with a clear restatement of the principles. For life insurance, it proposes to widen the categories of those who may insure the life of another.

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