REFORMING INSURANCE LAW: - Law Commission

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6 FRAUDULENT CLAIMS 6.1 Meaning of fraud 6.2 – 6.3 There must be a claim 6.4 The effects of a fraudulent claim 6.5 – 6.6 Effects on the policy and other claims 6.7 Effects of fraud on later claims 6.8 Relief from fraud 6.9 7 WARRANTIES The common law 7.2 – 7.2 Warranties of fact 7.3 Continuing obligations: future warranties, coverage, terms, etc Outline 7.4 – 7.5 Acts and omissions 7.6 – 7.16 Acts or omissions capable of causing/contributing to loss 7.17 – 7.18 Comment 7.19 – 7.23 Continuing obligations in marine insurance Express marine warranties 7.24 – 7.25 Implied marine warranties 7.26 – 7.29 Other implied terms affecting marine policies 7.30 – 7.31 8 OTHER ISSUES RAISED BY THE AUSTRALIAN LEGISLATION Matters within the Law Commissions’ scoping document 8.1 Definition of insurance and scope of legislation: marine 8.2 – 8.5 Insurable interest 8.6 – 8.10 Policies covering other interests 8.11 Late payment of policy proceeds 8.12 – 8.15 Subrogation 8.16 – 8.21 Brokers 8.22 – 8.23 Other matters governed by the 1984 Act 8.26 Choice of law and jurisdiction 8.27 Standard cover 8.28 – 8.29 Late payment of premiums 8.30 Claims made and notified liability policies 8.31 – 8.34 Maximum cover obtained for premium 8.35 Average clauses 8.36 Double insurance and contribution 8.37 – 8.38 Sale of insured property 8.39 Third party rights under liability policies 8.40 Refusal of proposal 8.41 Renewal of policies 8.42 – 8.43 Cancellation of policies 8.44 – 8.45 Matters in the 1984 Act already part of domestic law 8.46 Arbitration 8.47 Third party rights 8.48 – 8.50 Variation of insurance contracts 8.51 4
1 INTRODUCTION REFORMING INSURANCE LAW: IS THERE A CASE FOR REVESE TRANSPORTATION? Robert Merkin 1.1 In January 2006 the English and Scottish Law Commissions, prompted by an investigation conducted by the British Insurance Law Association in 2002 and by strong indications from Brussels that a European Union directive on the harmonisation of insurance law is under consideration, announced a review into insurance law. The process was initiated by a Scoping Paper, launched by a meeting at Lloyd’s, by which the Law Commissions sought views on the matters to be investigated. The responses received by the Law Commissions over the following months covered virtually all aspects of the law, and the Law Commissions announced in August 2006 the adoption of a wide-ranging investigatory programme. Issues Papers have to date been published on utmost good faith and warranties, a further paper is to be published in the first half of 2007 on the role of intermediaries. The present paper is for the most part confined to these issues, although certain other aspects of the law, such as late payment of claims, are relevant to good faith in the wider sense and are considered in what follows. A series of working seminars have been held to discuss particular issues within the review. The present author suggested to the Law Commissions at an early stage that it would be worthwhile investigating the Australian experience of the reform of insurance law by the Insurance Contracts Act 1984 (Cth), and the present offering is the result of those investigations. 1 The key provisions of Australian 1 A good deal of the research was conducted in Sydney to coincide with the Australian Insurance Law Association Annual Congress, and thanks are owed to a number of people and organisations in that jurisdiction. Michael Gill of DLA Phllips Fox and Peter Mann of Clayton Utz were kind enough to organise and host open forums at their respective offices, and at those events the author was able to pose questions to leading lawyers, underwriters, brokers and academics. Nancy Milne, who conducted the recent reviews of the Australian legislation, willingly answered my detailed questions. Frank Hoffmann, a consultant to the Australian Law Reform Commission, generously gave the author a mass of background papers as well as an original copy of the ALRC’s 1984 Report. The chairman of the ALRC, Justice Michael Kirby, provided the author with valuable insights into the thinking behind the Report. Of the numerous people who gave up their time, special mention may be made of Oscar Shub and Fred Hawke. Many of the opinions expressed in this paper are based upon information obtained from the Open Forums and from interviews conducted in Sydney. Kate Lewins’ article Reforming Non-Disclosure in Insurance Contracts, forthcoming in the Journal of Business Law, is a valuable source of information: Kate was also kind enough to read the paper in draft and made a series of valuable comments. Samantha Traves of the Faculty of Law, QUT and of Barry & Nilsson both attended the DLA Phillips Fox seminar in Sydney and read the paper in draft, also making many valuable points. Alison Hay of Berwin Leighton Paisner was yet another of the people generous enough to read the paper and provide thoughts on it.Thanks are also owed to my Southampton colleague Johanna Hjalmarsson, who made sure that I had not missed any relevant authorities. 5
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Page 6 and 7: legislation as it relates to substa
Page 8 and 9: different fate. On 9 September 1976
Page 10 and 11: invaluable in that it was devised a
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Page 30 and 31: therefore, an assured who uses a br
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5.14 A second obvious possibility i
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has been held - perhaps inconsisten
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is unduly harsh. Whatever the effec
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56(2), 298 and that what is require
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Warranties of fact 7.3 Warranties o
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person not to do the act or to avoi
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the risk and is purely administrati
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7.14 The position in Australia has
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personal injury claim failure by th
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7.20 Treasury Review I, 2003, found
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Continuing obligations in marine in
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contributed to by the illegality an
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waters, 391 that the classification
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changing market, and the Court of A
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unresolved issues as to whether the
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8.14 Although the point is not fina
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which the need for each of the part
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Review II, 2004, as an appropriate
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8.21 Finally, s 68 seeks to protect
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also include an address and telepho
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Standard cover 8.28 Standard cover
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period. In addition, such policies
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(the existing s 40(1)); or (b) the
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disputes as to whether the correct
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interests to do so. However, insure
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Matters in the 1984 Act already a p
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