REFORMING INSURANCE LAW: - Law Commission

legislation as it relates to substantive insurance law 2 will be discussed, and any benefits and
shortcomings will be identified. It is not the purpose of this paper to make comprehensive, or
indeed any, recommendations for the reform of domestic law: instead the focus is on Australian
provisions, although inevitably it has been necessary to consider some issues which are not dealt
with at all by the Australian legislation but which are significant in this jurisdiction. The author’s
general conclusion is that there is much to learn from Australia. The insurance markets in the
two countries are different in certain respects, in particular given London’s pre-eminence as a
centre for the insurance of global and other major risks and for reinsurance, but certainly in the
consumer and non-international contexts there are few appreciable variations.
1.2 In preparing this paper the author acknowledges a significant debt to Peter Mann’s
comprehensive text, Annotated Insurance Contracts Act, 4th edition 3 and also to the late
Professor Kenneth Sutton’s major work Insurance Law of Australia, 3rd edition. 4
1.3 The decision to reform the law in Australia in 1984 was greeted with a chorus of disapproval
from the industry, which feared for its future. Twenty plus years on, the system appears to have
bedded down with relatively little difficulty, and there has undoubtedly been a change not just in
the law but in the entire culture which surrounds the insurance industry. 5 Doubtless any attempt
to change the law in the UK will be met with protests from some quarters: the Australian
experience shows that the market adapts very easily to new laws as long as they strike a fair
balance between the interests of the parties. Many jurisdictions have revised their insurance laws,
and the London market may find itself becoming less sought after if there are rival centres with a
more benign legal environment.
1.4 One further introductory comment should be made. Many of the technical defences which
remain a part of English law are rarely taken on their own merits. In the vast majority of cases
there is a background dispute, often not articulated in the court, 6 which has prompted the
decision to contest liability. Of those background disputes, the most obvious is suspected but
unproven – and indeed often unprovable – fraud. While it is the case that fraud is notoriously
hard to prove, it might be thought that the legal system should not shy away from reform simply
to allow suspicious claims to be disposed of other than on their merits.
2
Much of the 1984 Act is concerned with regulatory matters, although the regulation of insurers generally is dealt
with by other legislation.
3
Henceforth, “Mann”.
4
Henceforth, “Sutton”.
5
To the extent that the author found underwriters to be more generous in their approach to various issues, in
particular fraudulent claims, than their lawyers.
6
Or sometimes being aired as an apparent makeweight. See Feasey v Sun Life Assurance of Canada [2003] Lloyd’s
Rep IR 637, argued as a case on insurable interest but at root about the alleged misconduct of an underwriting agent
who had carried on writing despite having his authority terminated.
6