Originally published in Insurance Day magazine on 5/7/07
This week the English and Scottish Law Commissions will publish a consultation paper on their review of insurance contract law.
The consultation paper follows on from issues papers published jointly by the Commissions and a good idea of where the Commissions may be heading can be gleaned from the contents of the papers. Although a major focus of the review has been on consumers and small business policyholders, it seems likely that a number of the Commissions' proposals will be of general application to insurers and brokers.
Among the reforms being considered are:
A redefining of the test of materiality for non-disclosure/misrepresentation.
Allowing insurers to claim damages from brokers for breach of brokers' independent duty of disclosure to insurers in the placing process.
In the case of consumers or small policyholders, linking insurers' entitlement to reject a claim for breach of warranty to demonstrating that the breach has caused or contributed to the loss.
If reflected in the Commissions' consultation paper and - ultimately - if they become law, these reforms could have far reaching consequences - both legal and commercial - for the insurance market. These could include major changes in the present matrix of legal relationships in the market place, in particular between insurers and brokers.
In a recent article in Insurance Day, Stephen Netherway, a partner in CMS Cameron McKenna's insurance and reinsurance group, considered the progress of the Law Commissions' review.
To view the article in full, please see below:
The road to 2010: how the next 'Big Bang' may play
Those following the current joint review by the English and Scottish Law commissions into insurance contract law will be aware that the commissions intend to publish a consultation paper shortly with a view to soliciting responses by November, 2007.
The intention remains to propose a reform of particular principles of insurance law that the commissions believe should follow further to the current consultative process. To achieve this, the current aim is to issue a final report and also to present a final Bill to Parliament to approve in 2010.
An idea of where the commissions may be heading may be gleaned from the contents of the "issue papers" that they have jointly published in the last nine months.
Ripe for reform
These signpost the fact that ripe for reform in the commissions' eyes are many...