TY - JOUR

T1 - Regulatory and Statutory Requirements on the Insurer’s Pre-Contractual Duty of Utmost Good Faith

AU - Jing, Zhen

PY - 2024/5/19

Y1 - 2024/5/19

N2 - This article considers the regulatory and statutory requirements on the insurer’s pre-contractual duty of utmost good faith. Insurance Conduct of Business Sourcebook (ICOBS) is the major source of regulatory rules in respect of insurer’s pre-contractual duties in relation to information provision, warning, advising, representation, and disclosure. There are two routes for the insured to seek redress in the case of insurer’s breach of a ICOBS rule. In the first place, the insured is entitled to damages under s.138D of the Financial Services and Markets Act 2000. Alternatively, insureds (consumers and small businesses) may resort to the Financial Ombudsman Service (FOS) that often awards damages for loss caused by breach of ICOBS rules by insurers. The FOS is not bound to follow the law, but to determine disputes by reference to what is fair and reasonable in the circumstances of each individual case. The Financial Service Act 2012 and the Consumer Rights Act 2015 also provide rules relevant to the insurer’s pre-contractual duty of utmost good faith and give additional protection to the insureds. This article critically discusses how these regulations and statutes operate to regulate the insurer’s pre-contractual duty of utmost good faith, analyses the loopholes and limitations in these regulations and statutes, and proposes solutions to the problems. A tentative non-exhaustive list of the insurer’s pre-contractual duties is set out at the conclusion part of this article.

AB - This article considers the regulatory and statutory requirements on the insurer’s pre-contractual duty of utmost good faith. Insurance Conduct of Business Sourcebook (ICOBS) is the major source of regulatory rules in respect of insurer’s pre-contractual duties in relation to information provision, warning, advising, representation, and disclosure. There are two routes for the insured to seek redress in the case of insurer’s breach of a ICOBS rule. In the first place, the insured is entitled to damages under s.138D of the Financial Services and Markets Act 2000. Alternatively, insureds (consumers and small businesses) may resort to the Financial Ombudsman Service (FOS) that often awards damages for loss caused by breach of ICOBS rules by insurers. The FOS is not bound to follow the law, but to determine disputes by reference to what is fair and reasonable in the circumstances of each individual case. The Financial Service Act 2012 and the Consumer Rights Act 2015 also provide rules relevant to the insurer’s pre-contractual duty of utmost good faith and give additional protection to the insureds. This article critically discusses how these regulations and statutes operate to regulate the insurer’s pre-contractual duty of utmost good faith, analyses the loopholes and limitations in these regulations and statutes, and proposes solutions to the problems. A tentative non-exhaustive list of the insurer’s pre-contractual duties is set out at the conclusion part of this article.

M3 - Article

JO - Company Lawyer

JF - Company Lawyer

SN - 0144-1027

ER -