General Insurance Article - LMA responds to consumer legislation changes

 The LMA’s Consumer Wordings Guidance has been updated to take account of the impact of the Consumer Rights Act 2015, which came into effect on 01 October 2015.

 Written in conjunction with leading law firm Clyde & Co, the Consumer Wordings Guidance is produced by the LMA to assist Lloyd’s managing agents in drafting new consumer insurance products and adapting existing commercial wordings to create consumer versions. The Financial Conduct Authority had previously noted that some adapted commercial wordings in the London market were too complex for private individuals. The LMA addressed this by revising its model wordings during 2014–2015.

 Alison Colver, the LMA’s Manager, Wordings, said: “Last year’s Consumer Rights Act marked a significant development in UK consumer legislation. It’s a new regime, as the Act sets out a framework that consolidates in one place key consumer rights in the sale of goods and services and covers such matters as digital content and the law relating to unfair terms in consumer contracts.

 “The Act places a strong emphasis on fairness when drafting insurance contracts. A wording is deemed to be unfair if it creates a significant imbalance to the consumer’s detriment. Those drafting consumer policies should be asking themselves whether a consumer would be aware of the important policy terms; will they understand the terminology and language; are the key aspects appropriately drawn to their attention?”

 Other topics revised in the new guidance include Lloyd’s Complaints Procedures, cooling off periods and statutory status disclosure.

 The document is available to download from the LMA website: www.lmalloyds.com/cwg.