According to the governmental bill superseding it, the Act is not meant to introduce any far-fetching changes. The Act aims at bringing the legislation up to date with present market terms and conditions as well as regulating new areas of the insurance market. Another objective of the Act is to strengthen the position of policy holders and other parties that are entitled to compensation from insurance companies, for example through expanding the information requirements imposed on insurance companies.
Information requirements in relation to company insurances
The Act imposes on insurance companies new duties and increases the scope of existing duties to provide policy holders with information regarding the insurance. These duties cover not only information prior to and in connection with the entering into of the insurance contract, but also information during the entire insurance period, upon renewal of the insurance contract and in connection with an amendment of the conditions of the insurance.
The Act also contains an entirely new regulation stipulating a mandatory obligation for insurance companies to provide their company customers, to the same extent as to individual customers, with information about their insurances. However, the information requirement does not apply if the insurance company has reason to believe that the corporate policyholder does not need the specified information. Hence, insurance companies do not have to provide this type of information to larger companies with prior knowledge in the field of insurance contracts.
An omission to supply information poses a potential risk for the insurer. If the insurance company would be in breach of the regulation on information and such breach would be material, the customer would be entitled to terminate the insurance agreement in advance and have the premium reimbursed. Moreover, the Swedish Market Court (Marknadsdomstolen) can order an insurance company that does not provide such information to do so.
Too much information?
From a customer point of view, it may be a good idea to have mandatory rules regarding information. Many companies, at least small and medium-sized companies, may lack deeper knowledge about insurance. Under the former Insurance Contract Act every company had the opportunity to ask for information whenever they felt the need for it. However, under the new Act the insurance companies may, in order to avoid the consequences of a breach of the regulation, provide their company customers with substantial information about their insurances so as to protect themselves. This may lead to the oversupplying of information with the effect that companies may be put off from fully reading the information provided. If this turn out to be the case the Act may lead to increased insurance premiums to cover the cost of providing additional information, without giving policy holders the increased protection the designers of the Act had hoped it would.
Oskar Hedlund
