global insurance management

Consumer Insurance Act 2012 - Reminder

Apr 15 2013

Consumer Insurance Act 2012 - Reminder

Relevance:                   All firms.

Action required:           Check that all required changes to Consumer insurance disclosures have been made.

We recently advised firms that the Consumer Insurance (Disclosure and Representation) Act 2012 would be taking effect from 06 April 2013 and would be altering the duty of disclosure for Consumer customers.

The Act will remove the duty on Consumers to disclose any facts that an underwriter would consider material (whether or not a specific question was asked) and replace it with a duty to take reasonable care not to make a misrepresentation on questions they have been asked. These changes will therefore impact on risk questions asked and documentation issued to customers.

It is worth reminding firms of some of the actions that should be carried out:

  • Terms of Business document needs to be amended.  We have drafted a paragraph for firms to use in their client TOBA replacing the current paragraph “Your duty of disclosure”, as follows:


Providing information to your insurers

Your insurance is based upon the information provided to the insurance company.  Unless otherwise indicated by the specific insurer underwriting your particular policy, the following circumstances apply.

For Consumers (individuals buying insurance wholly or mainly for purposes unrelated to their trade, business or profession) this means that you must take reasonable care to answer all questions fully and accurately. Once cover has been arranged, you must immediately notify us of any changes to the information that has been provided to your insurers. Failure to provide accurate and up to date information may invalidate your insurance cover and mean that a claim may not be paid.

All other customers must disclose all ‘Material Facts’ (any information that may influence the insurer’s decision over cover or terms) prior to inception and throughout the period of insurance. Failure to disclose material information may invalidate your insurance cover and could mean that a claim may not be paid.


  • Consumers will have to complete a proposal or receive a Statement of Fact when arranging cover with new insurers. When offering renewal with the existing insurer, on or after the implementation date of the changes, we recommend that you send the last Proposal form or Statement of Fact that you have on file and ask the client to check that nothing has changed.
  • Where you may be completing the proposal form on behalf of the Consumer, make sure that you ask each and every question and record the answer given correctly and fully.
  • Review any stock of standard letters and documents such as Demands and Needs, MTA confirmations and Renewal invites to modify any reference to “material facts” for Consumers and incorporate suitable “reasonable care” wording, such as that recommended for your Terms of Business.

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