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Non-disclosure most common problem facing insurance industry

Saturday, 02 October 2010 00:00

The Annual Report from the office of the Ombudsman of Short-Term Insurance (OSTI) for 2009, noted that the majority of claims submitted to the Ombudsman’s office were a result of consumers’ poor understanding of insurance principles. According to Brian Martin, Ombudsman for Short-Term Insurance, many of the problems consumers experience are a result of not reading their policy documents.

Failing to read policy documents also means that consumers are unaware of incorrect information in their policies which could qualify them for non-disclosure, the most common problem facing the insurance industry says Martin. “The most common misunderstanding on the part of consumers in relation to short-term insurance arises from the duty of disclosure. Many consumers are not aware of the fact that there is an obligation upon an insured, at the time of proposal for a policy of insurance, to disclose to the insurer all facts which may be material to the insurer’s assessment of the risk or the premium to be charged.”

When insureds fail to disclose all relevant information to insurers, or mislead their insurer in some other way, the insurer can void the contract for non-disclosure. The information given to the insurer at the time the policy contract is entered into is used to determine the client’s risk profile. This determines the premium. If the information is unreliable, the premium is miscalculated and the insurer can consider it a breach of contract.

When comparing insurance policies or buying an insurance policy, always be honest with the insurer. It might mean a higher premium, but it prevents the insurer from repudiating any of your claims at a later stage.

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Non-disclosure most common problem facing insurance industry

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