Insurance Contracts(Disclosure)

HC Deb 28 March 1984 vol 57 cc280-1

9. Mr. Janner

asked the Secretary of State for Trade and Industry whether measures reforming the law of duty of disclosure in insurance contracts will be introduced in the present parliamentary Session.

Mr. Butcher

No, Sir. However, it remains the Government's intention to introduce legislation to reform the law on non-disclosure in relation to insurance contracts affecting private consumers as soon as legislative time is available.

Mr. Janner

I welcome that assurance. When will the Department's current review of the law on material nondisclosure be completed? When does the Under-Secretary of State expect to have legislative time available to remove this totally unreasonable protection that is held by insurers, so that the people who are insured receive the cover they have bought when they most need it?

Mr. Butcher

I am sure that the hon. and learned Gentleman will be encouraged to know that the Law Commission's report has been a basis upon which consultations have been held. A number of the matters, about which the hon. and learned Gentleman has been anxious will be incorporated in our legislation. We have said that we wish to introduce legislation as soon as possible, but the hon. and learned Gentleman will not expect me to pre-empt the contents of the Queen's Speech.

Mr. Cockeram

Does my hon. Friend accept that insurance contracts have always relied on the utmost good faith by both parties to the contracts and that, no matter how he seeks to alter the law, he cannot prescribe for every eventuality? In practice, therefore, the principle of utmost good faith by both parties must continue to apply, whatever steps he takes to alter the law.

Mr. Butcher

The principle of good faith will continue to apply. A definition will be made of what is "reasonable" in terms of reasonable disclosure. The Government agree with the Law Commission that voluntary undertakings by the industry are not a substitute for reforming an unfair law.

Mr. Williams

As the Under-Secretary of State has no intention of introducing legislation, what action does he propose to help the victims of the 20 companies that collapsed and that had been offering extended guarantee insurance to their unfortunate victims? Will the hon. Gentleman confirm that thousands of consumers not only lost their premiums but, because of the availability of those phoney guarantees, have been conned into buying secondhand cars, which they probably would not have bought without closer inspection? They have been deprived of protection under consumer protection legislation. False representations were made about the relationship with Lloyd's of the bust companies. On top of all this, the victims are finding that many retailers are trying to evade their responsibility for the one-year guarantee, which applies regardless of the collapse of those firms. Why is the Under-Secretary of State doing nothing? Why is he not warning the public of the risk? Why is he not giving guidance about the bona fide firms?

Mr. Butcher

Extended guarantee insurance is not pertinent to this question, although it is pertinent to a number of other questions tabled by hon. Members, which will be answered in due course. In my earlier answer I said that we planned to introduce legislation at the earliest possible time. The hon. Gentleman knows the considerations that must be borne in mind. I cannot and will not preempt the contents of the Queen's Speech.