Insurance | 01 May 2010

Although the courts are often at pains to point out that insurance law is merely a subset of general contract law and should be applied without any concession or discrimination simply because the subject matter is insurance, there are, in fact, several aspects that are peculiar to insurance. An understanding of these anomalies will assist in penetrating the sometimes arcane depths of insurance law. They include:

  • the payment of brokerage and premium;
  • secret commissions;
  • the status of warranties and conditions;
  • the role of the broker;
  • consequential loss;
  • mitigation;
  • the Block Exemption Regulation; and
  • the courts’ attitude towards insurers in the interpretation of their contracts.

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Insurance | 01 April 2010

When an event occurs that triggers a notification provision in an insurance contract, the terms should be complied with before quietly sitting back and waiting for the insurer to exercise its rights to adjust the loss or control any issues that arise, including litigation. It is clearly in the insurer’s interests to minimise the loss that it will eventually be paying. But an insurer is entitled to take some time to look into the problem, or it might make its mind up immediately to reserve all its rights, simply decline the claim or, in an extreme scenario, avoid the policy. What should an insured do in these circumstances before a settlement can be negotiated or its rights assessed by a court? [Continue Reading]

Insurance | 01 March 2010

For over 100 years property and liability insurance law has largely been governed by the Marine Insurance Act 1906, a product of careful thought and drafting that codified the previous 200 years of case law. Times have changed, however, particularly in the speed of communications, the availability of information and the development of the law. The asymmetry of the parties’ positions, whereby the insured knew everything about its affairs and the insurer knew nothing, is today very different. This has resulted in a great deal of activity in the review by trade bodies and the Law Commissions (of England and Scotland) of insurance law over the past ten years, culminating in two recent bills, the Third Parties (Rights against Insurers) Bill (the Third Parties Bill) and the Consumer Insurance (Disclosure and Representations) Bill (the Consumer Insurance Bill). [Continue Reading]

Insurance | 01 February 2010

History shows that, at least since the 1950s, the likelihood that any authorised insurance company will not be able to pay its claims in full is reassuringly small. The level and composition of assets required by insurers, and their liquidity in particular, is carefully regulated by the Financial Services Authority (FSA), as is the standard of their management.

The FSA rigidly enforces its regulations because a problem with an insurer can result in disproportionate loss to its policyholders. Past examplesSuch stringent regulation is the result of some high-profile collapses. The failure of Emil Savundra’s Fire, Auto & Marine Insurance Company to pay debts owed to 400,000 motorists in 1966 led to a significant tightening of UK insurance legislation and responsibility for insurance supervision shifting to the Board of Trade under the Companies Act 1967. [Continue Reading]