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Member, Beacon International Group, Ltd.
LONDONThe English and Scottish Law Commissions Wednesday published their first consultation paper on insurance contract law.
"Insurance Contract Law: Misrepresentation, Non-Disclosure and Breach of Warranty by the Insured" sets out provisional proposals for the reform of the law in these areas and is open for responses until Nov. 16, 2007.
The areas under investigation are misrepresentation and non-disclosure by the insured before the contract is made; warranties and similar terms; and cases where an intermediary is wholly or partly responsible for pre-contract misrepresentations or non-disclosures.
The paper deals with consumer and business insurance separately. With regards to business insurance, the Law Commission said that it was consulting on "a default regime" which would apply to all areas of business insurance, and that no separate rules for marine, aviation or transport insurance, or for reinsurance, would apply. The Commission said to do otherwise would be "unduly complex" and that it wanted to avoid "arbitrary distinctions." Parties are permitted to contract out of the default regime, however.
Proposals include restricting businesses' duty to disclose and similar rules on misrepresentations as those for consumers. Views are sought on whether the remedy of avoidance should be reserved for dishonest conduct with the insurer having a compensatory remedy for negligent misrepresentation or non-disclosure.