Insurance Contract Law
The Law Commission and Scottish Law Commission are conducting a joint review of insurance contract law.
Structure of this web page
Current consultations
Future work
Previous work
List of publications
More information
Issues Paper 8: The Broker's Liability for Premiums - Should Section 53 be Reformed?
On 19 July 2010 we published an issues paper on the broker’s liability for premiums under section 53 of the Marine Insurance Act 1906. The provision makes the broker directly responsible to the insurer for the premiums due under an insurance contract, whether or not the broker has received them from the policyholder.
The issues paper identifies anomalies within the provision, which probably applies to marine insurance only, and describes the conflicting case law arising from it. The section places risks on brokers if a policyholder becomes insolvent – and we think that it may also place risks on insurers if a broker becomes insolvent. The paper considers whether there should be reform to bring the broker’s liability into line with the general law on contract and agency and to allow greater flexibility in contractual arrangements. The paper asks whether section 53 should be reformed.
We welcome responses by 19 October 2010.
The following documents may be downloaded:
Issues Paper 8
Summary
Press release
Issues Paper 7: The Insured’s Post-Contract Duty of Good Faith
Insurance contracts are said to be based on mutual duties of good faith. The two Commissions have been looking at how these duties work after the contract has been formed.
On 9 July 2010, we published an issues paper on the policyholder’s duty to act honestly during the life of a contract. The paper focuses on the law of fraudulent claims, and in particular the remedies which should be available to the insurer if a policyholder makes a fraudulent claim.
The current law is confused. Under section 17 of the Marine Insurance Act 1906, if a policyholder acts fraudulently, the insurer may deny the whole insurance contract, and demand back any money paid on previous claims. In practice, the courts are reluctant to allow this. Instead, they have said that a fraudulent claimant should forfeit their entire claim, even the part that is legitimate, but that other claims should remain unaffected.
We think that the courts apply the right policy, but this is incompatible with the 1906 Act. We tentatively propose that section 17 should be reformed and ask for views. The paper also considers fraudulent claims in joint and group insurance, and whether the duty of good faith has other implications. We welcome responses by 11 October 2010.
The following documents may be downloaded:
Issues Paper 7
Summary
Press release
The current status of our insurance project is illustrated on a flow diagram which can be downloaded here.
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 provide legal research to assist with student assignments. This does not affect your rights under the Freedom of Information Act 2000 to request information.