The Consumer Insurance (Disclosure and Representations) Act 2012, which took effect on 6 April 2013, changed the law to increase the rights of purchasers of personal insurance.
Nipping ahead, in the same month the Financial Services Act 2012 replaced the previous definition of "consumer" under the Financial Services and Markets Act 2000 with "persons who use, have used or may use regulated financial services". The new definition applies equally to the largest companies and to "two legged consumers". As a result, under the regulatory regime, the FCA is now obliged to protect the rights of all consumers of insurance products, however sophisticated they are.
The Law Commission has recently consulted on reforming the law in relation to business insureds. It is likely that the law will eventually be changed to offer greater protection to business insureds – but as things currently stand, insurance contract law is lagging behind regulation in the race to protect the rights of insurance policyholders.
This article is an abridged version of Insurance law and regulation – the tortoise and the hare, which was originally featured in our Emerging Themes publication.
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