This is another significant milestone in a 25 year campaign by insurance law experts to modernise our insurance contract law, creating a better balance between consumers and insurers. It has been vigorously promoted by the Law Commission and has support right across the insurance industry following the final recommendations from the Commission and its Scottish counterpart for reform back in December 2009. The new government's silence on the issue was broken earlier this month and next week's short debate will be the start of what many will hope is an smooth and relatively quick Parliamentary passage.

At this stage, it is hard to see where any opposition could come from - hopefully, it stays that way.

The front page story in today's Metro goes right to the heart of what is reasonable in terms of disclosure and underwriting. It quotes the Association of British Insurers as saying that people who took out travel insurance after 2 November should have reasonably foreseen the scheduled 12 day strike by BA cabin crew. That is six weeks ago, note. Is that reasonable? I would argue that it is not and that to decline claims on those grounds would probably be seen as unfair on consumers under the new law.

As I read the Consumer Insurance Bill, underwriters would be expected to ask the prospective policyholders if they were aware of the possibility of a strike when they took out the policy. I do not think most people booking Christmas flights in the first week of November knew that there would be a strike between 22 December and 2 January. Frankly, if they did they wouldn't have booked with British Airways. If underwriters can show that insurers were clever enough to kn0w this was a likely outcome then why did they take people's premiums knowing that they were not going to pay out for this? It is this imbalance of knowledge (and thus power) that the Law Commission does not like and is trying to address in its proposals.

It might also be interesting to ponder the implications for any intermediaries who arranged travel cover for their clients that will not now payout. With the new clarity proposed on the law of agency in the Consumer Insurance Bill they might, in future, find that their clients would have a bone fide claim against them in such circumstances for not acting fully in their interests.

I would like to think the ABI might sit down with its members who underwrite travel insurance and consider whether it would be better to behave now as if the new law was in force.

Fortunately, wiser counsels have prevailed in the ABI since then. There was always a feeling that the ABI membership was divided on this issue as its objections did not carry alot of conviction.

At the heart of the proposals is a genuine switch in the balance of power between policyholder and insurer with a three tiered approach to meeting claims.

If the Consumer Insurance Bill becomes law insurers will have to ask direct questions about any information they need to underwrite the risk and, if consumers have taken reasonable care in answering those questions, claims will have to be paid in full. This will apply even if an honest and reasonable mistake has been made by the policyholder. If a claimant is found to have been careless in answering a question, however, then the insurer will be entitled to reduce the payout dependent on what it would have done had it known the full facts at the time the policy was taken out. Only if there is deliberate misrepresentation will an insurer be able to decline a claim.

Insurers will be banned from using the current basis of contract clauses, such as "failure to disclose any material information may invalidate your insurance cover", further emphasising the switch towards better consumer protection that the Law Commission is proposing. The bill will also clarify the law of agency as it applies to insurance brokers and intermediaries by introducing a statutory code based largely on existing law and supplemented by current Financial Ombudsman Service guidance and industry practice.

The ABI still has some fears that the bill could be amended as it goes through Parliament to make the provisions even more consumer-friendly. I think that now some of the controversy has been taken out of the debate that there is much less likelihood of this and that the bill could move very swiftly through its Parliamentary stages, although it has to be touch and go whether it will make it into law before a General Election is called. We may well find ourselves still debating this in a year's time.

Following on behind this will be reforms of commercial insurance contract law which the Law Commission is currently working on. Whether these prove to be as radical remains to be seen.