Britain’s biggest insurer is considering writing to as many as two million customers, inviting them to confess to telling lies or omitting key details when filling out their insurance applications.

In a pilot beginning this week, Norwich Union will begin sending letters to 5,000 life and critical illness policyholders, giving them the opportunity to tell the company about any medical details they left off their initial application.

The letter warns policyholders to answer the questions about their health, including how much alcohol they drink and whether they have taken recreational drugs, “accurately and truthfully”.

A spokeswoman said that the insurer would consider extending the practice to the rest of its two million protection customers if the pilot was well received.

Every year insurers reject about 20 per cent of life and critical illness claims because policyholders leave medical information off their application form. Insurers call this “nondisclosure” and say that it renders the policy invalid.

However, consumer watchdogs have criticised critical illness insurance because the application forms can be complex, with open-ended questions and narrow definitions of the illnesses covered.

A recent report by Which?, the consumer magazine, said: “It sounds extreme, yet failing to tell your insurer about a visit to the doctor about a headache a few years earlier could invalidate a claim if the insurer decides that it is relevant.”

Norwich Union rejects 12 per cent of critical illness claims and 1 per cent of life term insurance claims.

Willie Mowatt, the insurer’s director of risk products, said: “We want to be able to clearly advise people who think they may have nondisclosed how to proceed if they believe they may have missed something off their application form.”

Letters to the 5,000 policyholders, who have been chosen randomly, will be sent out over the next three months. Policyholders not in the pilot can contact the insurer at any time to review their application form if they think they may have omitted key details. Norwich Union said that any additional information provided could change the cost of a policy.

Two of Britain’s biggest protection insurance providers, Standard Life and Legal & General, said that they would monitor NU’s initiative closely. An L&G spokesman said: “Anything which helps cut non-disclosure and improve confidence in critical illness cover has got to be positive.”

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