Shipping_&_Trade_Law-_Insurance_Act_2015_ _a_new_beginning_or_business_as_usual-

英国2015保险法

InsuranceAct2015–anewbeginningorbusinessasusual?

TheInsuranceAct2015receivedroyalassenton12February2015,havingbeenspedthroughtheHousesof

Parliamentunderaspecialprocedurefornon-controversialLawCommissionBills.

FollowingsubmissionoftheLawCommissionBilltoParliamentinJuly2014,severaldaysofwitnessevidencetotheSpecialCommitteeoftheHouseofLordsinDecember2014resultedinafinalversionoftheBill,publishedon16January2015.

UndertheexpeditedprocedureapplicabletoLawCommissionBills,thistextwentforwardtothefullHouseandthentotheHouseofCommons,toreceiveRoyalAssenton12February2015.ItwascrucialthatthewholeprocessshouldbecompletedbeforetheendofParliamentandinparticularbeforethegeneralelectioninMay2015.

InsuranceAct2015:threefailures,two-and-a-halfsuccesses

Theexpeditedprocedurewascrucialtothesuccessoftheventure,creatingaone-offopportunitytopromulgatetheresultsoftheconsultationprocessthathastakenplacesince2006.TheexpeditedprocedurewasequallytosomeextenttheundoingoftheBill.Onlyuncontroversialbillscanbemadethesubjectofthisprocedure.Thismeantleavingoutafewobviouscandidatesforreform,notablyinsurableinterestandliabilityforinsurancepremiumsundersection53oftheMarineInsuranceAct1906.Thesearesaidtobethesubjectofafutureadditionalconsultationpaper.ItmustbeassumedthattheintentistoabolishtheMarineInsurance

(GamblingPolicies)Act1909,underwhichtherehasfamouslynotbeenasingleprosecutioninover100years,andwheremodernregulationhasnowreplacedanyneedforcriminalstatute.That,alongwiththeinsurableinterestprovisionsoftheMarineInsuranceAct1906,haveindeedbeentargetsforlawreformatleastsincetheGamblingAct2005createdaverypeculiaranduncertainlegalpositioninrelationtoinsurableinterestinpropertyinsurance.Section53ontheotherhandrequiresamoredelicatetouch–replacementratherthanrepeal.

Worse,latepaymentofinsuranceindemnitieswasomittedatalatestageaftertheLloyd’sMarketAssociationvoicedobjections.Theconcernwassaidtobethattheclaimsmanagementindustrywouldlosenotimeinaddingthecauseofactionforlatepaymentofdamagestoitsarsenal,atsubstantialcosttotheinsuranceindustryandintermediatelytoinsureds.Althoughnomentionwasmade,itissincerelyhopedthatlatepaymentremainsontheagenda,althoughthishasnotbeenmadeexplicit.Ifnot,unlesssomeboldclaimanthastheresourcestotakeacasechallengingSprungvRoyalInsurance(UK)Ltd([1999]Lloyd’sRepIR111)tothe

SupremeCourt,wearethereforestuckwiththecurrentrulefortheforeseeablefuture.Fortunatelyregulatorymeasures(ICOBS8.1.1)appeartomakeupforthelacunafornowbystatingthatclaimsmustbehandledandsettledpromptly.DamagesareavailableundertheFinancialServicesandMarketsAct2000section138D,butonlytoprivatepersons.

HowaboutthesuccessesoftheInsuranceAct2015?

ThenewActembracesthedutyoffairpresentationinplaceofthedutyofdisclosure.Keyaretheprovisionsinsection3(3)and(4),whereafairpresentationoftheriskisdefinedasonedisclosingeverymaterialcircumstancewhichtheinsuredknowsoroughttoknow,orfailingthat:“disclosurewhichgivestheinsurersufficientinformationtoputaprudentinsureronnoticethatitneedstomakefurtherenquiriesforthepurposeofrevealingthosematerialcircumstances”.Thelatteristhelowerbarandthereforetheonelikelytobesubjecttolitigation.Theappearanceofthe“prudentinsurer”,afictionalstandard,meansthatthestandardofdisclosureistoberegardlessoftheunderwriter’sowncapacitiesingeneralorontheparticularday.Adrunkenunderwriterwhohappenednottobeputonnoticebytheinsured’sfailuretodisclosecanthereforestillcalluponthisrule(subsection4).Toconstituteafair

presentation,disclosuremustalsobereasonablyclearandaccessibletotheprudentinsurerandmustbesubstantiallycorrectandmadeingoodfaith(subsection3).

TheprovisionsoftheActonfairpresentationanddutyofdisclosureremainmostlyunchangedfromtheDraftBillproposedbytheLawCommissionsinJuly2014,butwithseveralparagraphsaddedtoclarifywhoseknowledgeistobindtheinsured;atopiconwhichtherewasmuchdiscussionintheDecemberSpecialCommittee.

TheActadoptsthe“deliberateorreckless”languageoftheConsumerInsurance(DisclosureandRepresentations)Act2012,avoidingtheuseofthewordfraudwhichcarriesundesirableconnotationsinrelationtothestandardofproof.Adeliberateorrecklessbreachpermitstheinsurertoavoidwhileretainingthepremium.Forotherbreachesonthepartoftheinsured,thepolicyremainsintactandtheremedyisproportionatetotheeffectontheunderwriter.

Asforinsurancewarranties,theywillbemodifiedbeyondrecognitionbytheamendments.IntheMarineInsuranceAct1906,thesecondsentenceofsection33(3)isdeleted.Thisisthesentencecontainingtheremedy:“Ifitbenotsocompliedwith,then,subjecttoanyexpressprovisioninthepolicy,theinsurerisdischargedfromliabilityasfromthedateofthebreachofwarranty,butwithoutprejudicetoanyliabilityincurredbyhimbeforethatdate”.Theprevioussentencestatingthatwarrantiesmustbeexactlycompliedwithishoweverleftintact,leavingsomeofthefamiliardraconianeffect.Courtshavebeenknowntoenforcethestrictcomplianceelementeveninrecentyears–forinstanceinthemarinecasesGEFrankonaReinsuranceLtdvCMMTrustNo1400(The

NewfoundlandExplorer)[2006]Lloyd’sRepIR704andBrownsvilleHoldingsLtdvAdamjeeInsuranceCoLtd(TheMilasan)

[2000]2Lloyd’sRep458(wherethejudges’strictinterpretationofthecrewingwarrantywasexplicitlyleftundisturbedbythelaterCourtofAppealauthorityinPrattvAigaionInsuranceCoSA(TheResolute)[2009]Lloyd’sRepIR149).

Theremedyofpermanent,automaticdischargefromtheinsurer’sliabilitychangestosuspensionofliabilityforthedurationofthefailuretocomplywiththeterm.Inaddition,section11oftheInsuranceActisheaded“Termsnotrelevanttotheactualloss”.ThissectionhasbeencomprehensivelyredraftedcomparedtotheJuly2014proposal.Thegistoftheprovisionistoaddtothesuspensorynatureofthenewremedyarequirementthattheinsured’sfailuretocomplywithpolicyrequirementssomehowcontributedtotherisk

英国2015保险法

ofloss.Thenotionsinvolvedarecomplexandinvitearetrospectivelookatthenon-compliancetodetermineifit“couldnothaveincreasedtheriskoftheloss”.Itremainstobeseenifsuchahypotheticaltestcanbesuccessfulinpractice;onthefaceoftheprovision,thebarfortheinsurersseemssetexcessivelylowifallthatisrequiredisproofthatafailuretocomplycouldhaveincreasedtherisk.

Whatissaidaboveappliestoexpressaswellasimpliedwarranties,includingthoseintheMarineInsuranceAct1906,sections36to

41.Thereappearstobenodirectindicationofwhetherthesuspensorynatureandthe“increaseofrisk”provisionaretoapplyalsotosection39(5),whichisnotawarranty.Inaddition,basisofthecontractclauseswillbeoutlawed;butthesewereneveraprobleminmarineinsurancebecausesection35(3)stipulatesthatallpolicytermsmustbeinorappendedtothepolicyitself.

Marineinsurancewarrantiesarenotaquaintfeatureofantiquitybutareincommonuseintoday’smarket,intheformsofcrewingwarranties,classwarrantiesandtowingwarrantiesandperhapsothers.TheLawCommissionshavebeenfairlyconsistentinavoidingdiscussionofMATinsurance(Marine,AviationandTransport)throughoutthesequenceofReports.Inthatlight,itisperhapssurprisingthattheActmakesextensivemodificationstotheMarineInsuranceAct1906inthisregard.

Fraudulentclaimsaredealtwithinaminimalisticway:theActappearstodolittlemorethancodifycurrentcaselaw,suchasitis.Thedefinitionoffraudulentclaims,andinparticularthefateoftheruleonfraudulentmeansanddevices,arenotaddressedatall;VerslootDredgingBVvHDI-GerlingIndustrieVersicherungAG(TheDCMerwestone)[2015]Lloyd’sRepIR115havingbeensubjecttoanapplicationforleavetoappealatthetimeoftheSpecialCommitteehearingsinDecember2014.Inthispart,theActrepresentssuccinctclaritybutperhapsnotanunambiguoussuccess.

Comments

TheActcreatesafewopenquestionsbothinwhathasbeenleftoutandinwhathasbeenaddressed.Thereisnodoubtwhatsoeverthatitisamilestoneininsurancelawreachedatlonglastonwearyfeet,andthatitcontainsseveralessentialinnovations.However,thereisastrongpossibilityoflitigationinrelationtoseveralfeaturesofthisnewAct,inparticularthefairpresentationrequirementsandthescopeofknowledgeoftheinsured.Otherpartsconsolidateexistingcaselaw,developedoverthepastcenturysincethe

MarineInsuranceAct1906anddonotrepresentanythingnew.Onthewhole,theenactmentdoesnotamounttoaradicaloverhaulofthelaw,worthyoftheConsumerInsurance(DisclosureandRepresentations)Act2012.

TheLawCommissionshavegivennoticeofplanstocontinuethelawreformprojectandtoputforwardanotherbillaftertheMay2015elections.However,inthecomingyear,parliamentarytimewillbescarcewithanewgovernmentlookingtoputthroughitsmostcontroversialandflagshiplegislativemeasuresinthefirstparliamentfollowingtheelections.Thereisnodoubtthatinsurancelawreformissorelyneeded.However,ifthisActisthefinalword,businessinsuredshavearguablybeensomewhatshort-changedbythelawreformprojectandthemarketremainsreliantonregulatorymeasures.

JohannaHjalmarsson