On 11 September 2009 EAPD partner Helen Clark attended a conference hosted by the British Insurance Law Association (BILA) at which members of the Restatement of European Insurance Law Project Group presented the public launch of the Principles of European Insurance Contract Law (PEICL).
Just as a review of UK Insurance Contract law is under way by the Law Commission, so a parallel review is being carried out in Europe which has the potential to transform insurance contract law.
The European Commission is concerned about the lack of cross border insurance products and services, believing that the matrix of laws and regulations in each of the 27 member states act as a barrier to provision of such services and products. In response, the Project Group for the Restatement of European Insurance Contract Law has for the last ten years been working on a set of Principles of European Insurance Contract Law. It is proposed that the Principles operate as an "optional instrument" allowing insurers and policyholders to apply the Principles to their contracts instead of national insurance contract law. Adopting the Principles should enable insurance companies to provide their services throughout the EU internal market based on uniform laws, establishing a high standard of policyholder protection.
As is the case for consumers under the Law Commission's current proposals, the Principles limit the insured's duty of disclosure to responding to clear and precise questions put to him by the insurer. Also mirroring the Law Commission proposals, the Principles introduce a proportionate approach to remedies, based on what the insurer would have done had he known the true position. For an innocent non-disclosure, the insurer will have no right to refuse to pay the claim.
An EU Regulation will be required in order for the Principles to become binding and the Project Group still has some drafting work to do. There are however good political indications that the European Commission is firmly behind the Project and that in the future, legislation will be introduced to allow the Principles to operate as an optional instrument.