Insurance law is unfair, it’s confusing and works against consumers. Claims are often unfairly refused just because the insurer says you didn’t tell them something important – even if they failed to ask you beforehand.
If you’ve bought travel insurance with critical illness cover and come a cropper holiday, you’d expect to get a payout. That’s the only reason you pay the premium. But often that’s not the case.
If you have a heart condition, but don’t mention your high blood pressure, then the insurer is right to dismiss your claim as these two conditions can be linked.
But how about if you’re in good health, then succumb to a serious illness, such as leukaemia? The insurer will then hit you with a bunch of questions and if it discovers you had an ear infection some time back, they could refuse to pay up.
This is surely wrong, but under the current law they can defend their decision (although you can complain, and take the matter to the Financial Ombudsman Service). But as absurd as my previous example sounds, it’s actually based on a real case.
Time for a change in insurance law
As for how they can justify refusing cases such as the one above, well, you can partly blame the Edwardians for that. More than 100 years ago the Marine Insurance Act was drawn up. This law was designed to make it easier for two expert parties, such as insurers, to conduct business in a sensible manner.
One important element of the Act covered disclosure of pertinent facts, or rather non-disclosure. But the Act wasn’t intended for a member of the public to grapple with buying travel insurance and knowing what part of their medical history was relevant to disclose.
Now, you’d expect experts to be able to distinguish between what’s essential to disclose and what isn’t, but the average person is less likely to spot the difference. That’s why we have ‘experts’, be they doctors, lawyers or insurers.
Surely, in the case of insurance, you’d assume the provider would have to ask the right questions up-front rather than wait until a claim is lodged?
Which? is calling for a review of insurance law, so that the onus of responsibility is not on consumers but on insurers. That seems to make sense for our rights, but does your experience of claiming on insurance back our campaign?
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