Reforming the Disclosure Duty in Insurance Contracts - Online Applications Increase Risk of Inadvertent Disclosure Breaches
Posted: 22 Sep 2011 Last revised: 11 Feb 2015
Date Written: September 22, 2011
New forms of marketing insurance products rely less on face to face dealings, and increasingly on impersonal interactions such as online applications. There is a corresponding increase in potential for breach of the disclosure duty when prospective insureds complete application forms without the assistance of intermediaries or the opportunity to ask questions before submitting proposals for insurance.This emerging reality for marketing insurance products, coupled with the insurer's right of nullification of the insurance contract in the event of breach of the disclosure duty, raises to the question of whether the prudent insurer test should still be used to determine materiality. Adoption of a prudent insured standard will not only facilitate access to insurance, but will also better reflect the reasonable expectations of consumers.
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