Insurance Contract Law: Post Contract Duties and other Issues

Open date: 20 December 2011

Close date: 20 March 2012

This Consultation Paper is divided into four self-contained chapters and consultees were asked to comment on whatever chapters are relevant to them.

The Consultation Paper covered the following issues:

Damages for late payment
Under English law, an insured is not entitled to damages for any loss suffered through delay in receiving payment of a valid claim. This differs from the law in Scotland, and appears increasing anomalous. The responses we received to Issues Paper 6 showed strong support for reform.  We set out proposals for reform.

Insurers’ remedies for fraudulent claims
The law on this issue is convoluted and confused. In response to Issues Paper 7, most consultees asked for the law to be clarified. We propose that fraud should not avoid the contract from the start; instead the fraudster should forfeit the whole claim and all subsequent claims. We also propose that in some circumstances the insurer should be entitled to claim damages from a fraudulent insured for investigating the claim.

Insurable interest
Responses to Issues Paper 4 revealed strong support for retaining the principle of insurable interest for all types of insurance. For indemnity insurance we propose to replace the mix of archaic statutes and common law with a clear restatement of the principles. For life insurance, we propose to widen the categories of those who may insure the life of another.

Policies and premiums in marine insurance
We propose to abolish the requirement of a formal marine policy, set out in section 22 of the Marine Insurance Act 1906. Responses to Issues Paper 9 showed that this section 22 was out-dated and no longer used.  We also propose reforms to section 53(1) of the Marine Insurance Act 1906, which makes a broker liable to pay premiums to the insurer. As discussed in Issues Paper 8, this is a complex provision which could have surprising consequences for an insurer if the broker were to become insolvent.

This consultation relates to our Insurance Contract Law project.

Reference number: LCCP201

Sign up for
Law Commission
consultation updates

Enter email address:

Also gives you access to other government law-related updates.