Insurance law reform: deterring fraud in the twenty-first century.

Purpose – The purpose of this paper is to provide a critical examination of the current law and the possible changes that are under consideration by the Law Commissions, after public consultation in relation to the continuing duty of good faith and post-contractual duties owed by the insured towards the insurer.

Design/methodology/approach – The research is addressed using case law, statutes, current academic and Law Commissions publications in the UK.

Findings – First, the paper finds that the current state of the law allows for the insurer to claim damages from an insured when a fraudulent claim is made to recover the cost of any investigations. Secondly the insurer can refuse to meet a claim that is tainted by fraud. Thirdly the insurer can have the right to avoid the policy obligations upon the discovery of a fraud, but subject to some limitations. Fourthly there is a need for the insured to be protected against an insurer’s unjustified allegations of fraud.

Research limitations/implications – This work does not address detailed issues in relation to pre-contractual issues of good faith. These have been discussed in a previous edition of this journal see Swaby. G. (2010) ‘Insurance law: fit for purpose in the twenty-first century?’ IJLMA, 52 (1), pp. 21-39. ISSN 1754-243X

Practical implications – The Law Commissions will be undertaking further consultations before reforming this area of law.

Originality/value – This paper will be of interest to legal practitioners and academics and those in the insurance industry.