Insurance Contract Law
Latest publications
Issues Paper 5: Micro-businesses - should micro-businesses be treated like consumers for the purposes of pre-contractual information and unfair terms?
In April 2009 the Law Commission and the Scottish Law Commission published an Issues Paper on micro-businesses and pre-contractual information and unfair terms. Research shows that many micro-businesses do not have specialised knowledge of insurance and are increasingly buying their insurance online without the benefit of a broker, in much the same way as consumers do. The Paper asks specific questions about protection against unfair terms in insurance contracts for micro-businesses. It also puts forward proposals to treat micro-businesses as consumers for the purposes of pre-contractual information. Finally it discusses how a micro-business should be defined.
We are eager to hear the views of all interested parties, in particular micro-businesses and ask for responses by 17 July 2009.
A press release and fact sheet are also available.
Policy statement on intermediaries: for whom does an intermediary act in transmitting pre-contract information from consumer to insurer?
In March 2009 the Law Commission and Scottish Law Commission published a policy statement on this topic, having promised to do so in the summary of responses on consumer insurance reform. The policy statement sets out proposals for a new statutory code for deciding for whom the intermediary acts when it passes pre-contractual information from the consumer to the insurer. These provisions will be incorporated into the draft Bill on consumer insurance (though similar principles may also be relevant to small businesses).
Section 83 of the Fires Prevention (Metropolis) Act 1774
In line with responses to the scoping paper published at the beginning of the project, the Law Commission is currently considering whether section 83 of the Fires Prevention (Metropolis) Act 1774 ought to be repealed, amended or left alone. This provision was originally intended to prevent arson and fraud. Its language is antiquated and its meaning is not clear. However, it has occasionally featured in recent case law. It has been used to enable persons interested in insured property, but who are not policy holders to claim insurance monies following a fire. We published a short introductory paper and would be grateful for views on the issues identified in it by 8 June 2009.
Background to the insurance contract law project
The Law Commission and Scottish Law Commission are conducting a joint review of insurance contract law. In July 2007, the Commissions published a Consultation Paper which set out proposals for the reform of insurance law in the areas of pre-contractual information and warranties. We have since published two summaries of the responses we received to that consultation: (1) a summary of responses on consumer insurance reform; (2) a summary of responses on business insurance reform.
Consumer insurance
There is a wide consensus that consumer insurance law is in urgent need of reform - not only among consumer groups, lawyers and brokers, but also among most insurance companies. The two Law Commissions are giving priority to drafting a Bill on this issue. We plan to publish a report and draft Bill in autumn 2009.
Business insurance
There is also support for reform of pre-contractual business insurance law. In response to comments raised by consultees we are consulting further on this in Issues Paper 5: Micro-businesses (see Latest publications above). This will be followed by a further issues paper on larger business insurance.
Scoping and issues papers
On 18/01/06, the teams working on the project at the two Commissions issued a scoping paper, inviting views on which areas of insurance contract law were in need of reform. In the light of the responses they received, the teams published a joint paper giving their decisions on the scope of the project.
The teams then developed their preparatory thinking for the first consultation paper through a series of issues papers.
Issues Paper 1: Misrepresentation and Non-Disclosure (published 22/09/06)
Issues Paper 2: Warranties (published 28/11/06)
Issues Paper 3: Intermediaries and Pre-Contract Information (published 21/03/07)
Issues Paper 4: Insurable Interest (published 14/01/08)
Lessons from Australia
In 1984 the Australians introduced a new Insurance Contracts Act, which reformed many of the issues we are considering, including non-disclosure and warranties. Recently the Australian Treasury reviewed those reforms and prepared amendments to their legislation. We were therefore particularly interested to see what the Australians have done, and what effects it has had.
To that end, Professor Rob Merkin undertook a legal and practical analysis of the 1984 Act. His paper highlights the successes and failures of the Australian legislation. It is not intended as Law Commission policy.
More information
If you would like to be kept informed of future publications and events we should be happy to add you to our email mailing list on request.
For more information, or to submit your views, contact the commercial and common law team. Further information is available from the team page.
NOTE - We are happy to provide information about our projects. However, we cannot give legal advice or deal with individual cases. Nor do we help with student assignments.