A report in a UK newspaper has highlighted an ongoing investigation into life insurers' use of non-disclosure as a factor in refusing policyholder claims for critical illness insurance payouts.

The Daily Mail newspaper has reported that pressure is mounting on life insurers over the non-disclosure issue. The Law Commission, which reviews and regulates UK statutes, is investigating the problem, with a consultation report due later in 2006.

The newspaper report claims that life insurers are being overly-strict in refusing life cover to consumers for non-disclosure reasons. It cites patients with critical illnesses whose claims for insurance have been declined after the insurance company sought extensive medical records that detailed ailments from the past that were not strictly relevant to the case in question.

The Law Commission itself gives an example of a case where an insurer acted to the letter, rather than the spirit of the law:

When Mr and Mrs C took out a critical illness policy they inadvertently failed to disclose that Mrs C had reduced hearing caused by ear infections. Subsequently, Mrs C was diagnosed with leukemia, which sadly led to her death. The insurer exercised its legal right to reject the resulting claim on the basis that the unconnected hearing loss had not been disclosed.