Richard Evans' article on the subject of the Law Commission's draft issues paper 1 dealing with misrepresentation and non-disclosure (Legal Report, October) was particularly welcome, especially to those in the industry and the law who have not had the opportunity of studying the full content of the paper.
But, he did not mention s7, which dealt with business insurances. That section raises the question as to whether the four major changes tentatively put forward for consumer insurance should apply to business insurance?
Any of the recommendations put forward by the Law Commission in respect of business insurances must, I would suggest, take account of any revised duty of the insurers, such as to ask reasonable or obvious questions concerning the risk presented.
The Law Commission has said that it will deal with insurers' duties in a later paper and I hope it will consider the position of an insurer who decides not to survey a risk for economic reasons, which, had it done so, would have brought to light certain material facts that the insured failed to disclose.
Many of us in the broking profession (past and present) are looking for a level playing field, so that each party can play its part in full disclosure, resulting in the insurer having an accurate knowledge of all material facts that are needed to underwrite the risk.
The broker must still have a fundamental duty to make certain that its clients are aware of their full duty of disclosure and not to misrepresent any facts concerning the risk.
It is too much to expect that the law will be fully reversed so that an insured is entitled to say to an insurer: "I need to insure my factory. Now, what do you want to know?" But, it does seem important that the insurer has a clear duty to ask those questions which it knows from experience are vital in its decision making, and not to remain silent as it is entitled to under present law, in the knowledge that any undisclosed material facts would entitle it to avoid the policy from inception.
The Law Commission's paper is a most thoughtful, thorough and erudite examination of the issues involved and I for one, look forward to future papers such as the one on warranties expected in November.
Derrick Cole, Secretary to the Bila sub committee on insurance contract law reform
