Commentary on Sections Part 5: Good Faith and Contracting Out Section 18: Contracting out: group insurance contracts
131.Section 18 addresses contracting out of section 13, which deals with the insurer’s remedies where a member of a group insurance contract makes a fraudulent claim.
132.Section 18(2) concerns group members who would each be a “consumer” if they had entered into the insurance contract directly with the insurer rather than it being a group policy. Section 18(2) provides that a term of a contract which seeks to put a consumer member of a group scheme in a worse position than they would be in under section 13 is, to that extent, of no effect.
133.Where a group member would not have been a “consumer” if they had entered the contract directly with the insurer, they are a “non-consumer C” and section 18(3) applies. This provides that an insurer must comply with the transparency requirements in order to use a contract term to put a non-consumer C in a worse position than it would be in under section 13. For the purposes of those requirements “the insured” means the person who took out the insurance on behalf of the group (referred to in section 13 as A).