The UK Parliament has introduced a new bill setting out what consumers should tell their insurer before taking out a policy.

The new bill, introduced into Britain’s House of Lords, will replace the 1906 Marine Insurance Act, which is the basis for current consumer disclosure rules.

According to the UK Law Commission, the current act “is inappropriate for modern consumer insurance and operates harshly”.

The current law requires consumers to volunteer information “about everything a prudent insurer would consider relevant”, it says in a briefing note.

“We think this duty should be abolished. Instead, insurers should be required to ask questions about what they want to know,” the commission said in support of the proposed Consumer Insurance (Disclosure and Representations) Bill.

The new bill abolishes the consumer’s duty to volunteer material facts.

Instead, the bill states consumers must take reasonable care to answer their insurer’s questions fully and accurately.

If consumers do volunteer information, they must take reasonable care to ensure that the information is not misleading, the bill says.

The UK Government has said it will take up the bill when it is introduced into the House of Commons. Financial Secretary to the Treasury Mark Hoban says it will deal with the bill when “parliamentary time permits”.

“This bill will provide protection for consumers and reduce costs for industry,” he said. “It is the result of lengthy consultation and has broad-based support from industry and consumer groups.

“The bill will be subject to minor modifications to meet concerns raised during the consultation.”

Association of British Insurers Director of General Insurance Nick Starling says the association will support the bill.

“We are optimistic that this bill will introduce into law what is already seen as best practice among the majority of insurers who strive to treat their customers openly and fairly,” he said.

“By making such good practice common, the bill will bring greater transparency and certainty while improving consumers’ faith in the insurance industry.”