Gillian Swanson, Project Manager
We are assisting the Law Commission for England and Wales with this project.
The requirement for insurable interest means that, for a contract of insurance to be valid, the person taking out the insurance must be affected by the subject matter of the insurance. They must stand to gain a benefit from its preservation, or to suffer a disadvantage should it be lost or damaged. There is a view that the current law, particularly for life and life-related insurances such as health and accident cover, is antiquated and overly restrictive.
After an extended period, the joint consultation on a working draft of the Insurable Interest Bill has now closed. We are grateful to all those who responded with comments and suggestions. Now our task is to analyse carefully all of the points which have been put to us and to consider next steps.
The project on insurance law
The project began in January 2006. The joint team issued a scoping paper, inviting views on which areas of insurance contract law were in need of reform. In the light of the responses received, a paper setting out the scope of the project was published. The first joint consultation paper, published in 2007, covered pre-contract issues in both consumer and business insurance but the emerging scale of the project led the Commissions to introduce a phased programme of work, dealing with pre-contract consumer and business issues separately.
Our first report on Consumer Insurance Law was laid before Parliament in December 2009 and the Consumer Insurance (Disclosure and Representations) Bill was introduced in the House of Lords under the Special Bills Procedure in May 2011. The Bill, now the Consumer Insurance (Disclosure and Representations) Act 2012, received Royal Assent on 8 March 2012 and came into force on 6 April 2013.
The Law Commissions' second joint consultation paper (2011) covered post contractual issues: damages for late payment, remedies for fraudulent claims, insurable interest and policies and premiums in marine insurance. Our third joint consultation paper (2012) covered disclosure in business insurance and warranties. Some of the results of these consultations fed into the second Report and draft Bill, published on 17 July 2014. That Report covered disclosure in business insurance, warranties, remedies for fraudulent claims, and late payment and was largely implemented by the Insurance Act 2015. The Insurance Act 2015 has been amended by the Enterprise Act 2016, Part 5, to include our recommendations on damages for late payment.
The Insurance Act 2015 also included provisions relating to the Third Parties (Rights against Insurers) Act 2010 so that it could be updated and brought into force. The 2010 Act, which also derived from recommendations made by both Law Commissions, simplifies the procedure by which third parties can claim against an insurer when the insured is, in broad terms, insolvent or has been dissolved. Regulations making the necessary changes (the Third Parties (Rights against Insurers) Regulations 2016) were made and the 2010 Act was brought fully into force on 1 August 2016.
All of the above-mentioned Commission papers, and other papers published in relation to the project, can be accessed by means of the links below.
Summary table of papers published so far:
If you require any further information on the Insurance Contract Law project, or if there are matters you wish to raise, please email: firstname.lastname@example.org.
If you would like to be kept informed of future publications and events we should be happy to add you to our email mailing list on request.