published its Consumer Insurance Bill we are faced by a very good example of why it is needed as a row has broken out over how far travel insurers are obliged to cover people caught up in the British Airways strike.
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.