REFORMING INSURANCE LAW: - Law Commission

ut that it has been loaned back to him thereby rendering him personally liable to the
underwriters, 478 and there have been problems in reconciling the statutory rule with contractual
provisions relating to the payment of the premium. 479 The ALRC in its 1991 Report
recommended the abolition of this anomalous rule, 480 a recommendation which would surely be
welcomed by many marine brokers operating in the London market.
Notification obligations
8.24 Various provisions of the 1984 Act require notice to be given by the insurers to the assured.
The relevant provisions for the purposes of this paper are: notification of the duty of disclosure (s
22); notification of variation from standard cover (s 35); notification of unusual terms in policies
not subject to standard cover (s 37); forfeiture of policy for non-payment of instalment of
premium (ss 39 and 62); inclusion of average clauses (s 44); notification of expiry of non-life
policy (s 58); notice of cancellation (s 59); inclusion of subrogation clause preventing settlement
by assured with third party (s 68); and supply of policy documents (s 74 481 ). The general rule is
that notice must be giving in writing, although s 69 permits oral notification where written notice
was not reasonably practicable as long as written notification is given subsequently. Written
notice must be given personally or by post (s 77). Notice must be legible and must comply with
the Regulations (s 72). Notice directly to the assured is waived where the insurance was arranged
by a broker acting for the assured (s 71): Treasury Review II, 2004, felt that this rule should be
maintained and that brokers should be under a duty to communicate the notice to the assured.
8.25 A particular issue arises with regard to electronic notification. The Electronic Transactions
Act 1999 permits written communications to be given electronically. However, insurance
contracts within the 1984 Act are excluded from this provision, so that all notices have to be
given non-electronically. Treasury Review II, 2004, 482 recommended that provision should be
made for electronic notices, and the reforms announced in February 2007 have taken the point
up. Section 72 is to be repealed and replaced with a revised version under which notices may be
given in the form prescribed by the Regulations, and the draft implementing regulation, 483 allows
electronic communications but subject to safeguards. A notification: (a) must not incorporate any
image, message, advertisement or other feature that (i) distracts, or is reasonably likely to
distract, the recipient, or (ii) otherwise reduces or interferes, or is reasonably likely to reduce or
interfere, with the recipient’s ability to understand the notice or document; and (b) must be
presented in a way that clearly identifies the information that is part of the notice or document;
and (c) must be presented in a way that would reasonably be expected to enable the recipient to
readily be able to scroll through the whole of the notice or document. An electronic notice must
478 Of the many authorities, see Universo Insurance Co of Milan v Merchants Marine Insurance Co [1897] 2 QB 93.
479 Prentis Donegan & Partners v Leeds & Leeds Co Inc [1998] 2 Lloyd’s Rep 326; J A Chapman & Co Ltd v
Kadirga Denizcilik Ve Ticaret [1998] Lloyd’s Rep IR 377; Heath Lambert Ltd v Sociedad de Corretaje de Seguros
[2004] Lloyd’s Rep IR 905.
480 ALRC 91, para 13.8.
481 Under the proposals contained in the draft Insurance Contracts Amendment Bill 2007, rights under s 74 are to be
extended to third party beneficiaries with a right to claim under the policy
482 Chapter 2, recommendations 2.1 and 2.2.
483 Draft Insurance Contracts Amendment Regulations 2007, reg 34.
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