July 17 Britain's Treasury announced reforms on Thursday it said would to modernise commercial insurance laws, hoping to reduce the number of claims-based legal disputes.
The new rules, based on eight years of talks between companies, underwriters and lawmakers, focus on forcing businesses to better disclose risk information before buying a policy, making insurers more flexible about breaches of warranty, and providing better fixes on dealing with fraudulent claims.
The previous legal framework gave insurers loopholes to refuse claims for irrelevant reasons, said Airmic, a body that represents corporate insurance buyers and risk managers.
However, two contentious clauses recommended by lawmakers were excluded from the Bill, according to the Financial Times. One of these would have entitled policyholders to damages when insurers delayed payouts, while the other would have curbed insurers' ability to reject claims by arguing policyholders breached terms and conditions. (on.ft.com/1ysdS6r)
The FT said some insurers had complained that these two measures were unnecessary and risked pushing up premium rates.
"The Bill is a very welcome development," Maurice Tulloch, CEO of Aviva UK & Ireland GI said, "We've been pushing for some time for contracts to be easier to understand." ($1 = 0.5844 British pounds) (Reporting by Richa Naidu in Bangalore, editing by William Hardy)