Insurance Law: An Introduction PDF
Preview Insurance Law: An Introduction
INSURANCE LAW AN INTRODUCTION Related titles A Guide to Reinsurance Law by Robert Merkin (2007) Private International Law of Reinsurance and Insurance by Raymond Cox QC, Louise Merrett and Marcus Smith (2006) The Law of Insurance Contracts, 5th Edition by Professor Malcolm A. Clarke (2006) Insurance Disputes, 2nd Edition by Rt. Hon Lord Justice Mance, Iain Goldrein QC and Robert Merkin (2004) Good Faith and Insurance Contracts, 2nd Edition by Peter MacDonald Eggers, Patrick Foss and Simon Picken (2004) INSURANCE LAW AN INTRODUCTION EDITED BY PROFESSOR ROBERT MERKIN First published 2007 by Informa Law Published 2013 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN 711 Third Avenue, New York, NY 10017, USA Routledge is an imprint of the Taylor & Francis Group, an informa business © Informa Law ISBN 978 1 84311 6776 ISBN 978-1-843-11677-6 (hbk) All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without the prior permission of Informa Law Whilst every effort has been made to ensure that the information contained within this book is correct neither the authors nor Informa Law can accept any responsibility for any errors or omissions or for any consequences resulting therefrom. Typeset by Interactive Sciences Ltd, Gloucester GENERAL EDITOR’S PREFACE This book is intended to be a practical guide for lawyers and professionals working in and with the insurance market. The publishers have assembled a distinguished team of lawyers and insurance practitioners, each of whom has been asked to prepare a practical yet comprehensive guide to the most sig- nificant issues affecting insurance law and practice. Fully up to date, each chapter sets out the framework of the law, and incorporates commentary on the most important and recent judicial decisions. It is hoped that the structure that has been adopted highlights the key matters which typically arise in insurance disputes, and does so in a manner more readily accessible than is often the case where the material is presented in traditional textbook form. Rob Merkin Sidmouth July 2007 PUBLISHER’S NOTE There are numerous case report studies throughout this book. Take time to understand the judgment in the case, and the reasons for it. Where important points of law are presented you will see this symbol: This will remind you that particular attention should be paid to that pas- sage. Cases reported in Lloyd’s Insurance and Reinsurance Law Reports can be viewed online at www.insurancelawreports.com. Look for this symbol: v This page intentionally left blank AUTHORS’ BIOGRAPHIES Professor Robert Merkin Professor Robert Merkin is Professor of Commercial Law at Southampton University. He is the author of a number of texts on insurance, reinsurance and arbitration law, and edits Lloyd’s Law Reports: Insurance and Reinsurance, and Insurance Law Monthly. His works have been cited in several High Court decisions in England together with a number of other jurisdictions including the High Court of Australia and the U.S. Supreme Court. Professor Merkin is a member of the Presidential Council of AIDA, Secretary to the AIDA Rein- surance Working Party, a member of the Law Society’s Insurance Law Sub- Committee and a past member of the Executive Committee of the British Insurance Law Association. Angus Rodger Angus Rodger is a partner in the London office of U.S. law firm Steptoe & Johnson. This practice is focused on insurance and reinsurance, and covers dispute resolution, regulatory advice, ART and complex transactions involv- ing insurance and policy drafting. He is the author of a book on EC insurance law, a contributing author to a book on reinsurance claims handling, and a frequent contributor to industry journals and conferences. John Lowry John Lowry teaches Insurance law at University College London, where he is a Professor of Law. He has also taught in the U.S.A. and practised in Canada. He is the author of a number of works including Insurance Law: Doctrines and Principles (2005), cited by the Supreme Court of Canada in Oldfield v. Trans- america Life Insurance Corp of Canada2002 SCC 22, and Insurance Law: Cases and Materials (2004). In 2001 he was appointed a Visiting Fellow at the University of Connecticut’s Center for Insurance Law Research. Alison Green Alison Green is a barrister and joint leader of the Insurance and Reinsurance Group at Two Temple Gardens. She has extensive experience of insurance and reinsurance litigation both before the courts and in arbitrations. She has represented major insurance and reinsurance companies, Lloyd’s underwrit- ers, the Corporation of Lloyd’s, insurance brokers and insureds. She has also acted for and against insureds and insurers in professional negligence cases, including insurance brokers. She is a Vice-President of the British Insurance Law Association, having been its chairman from 1994 to 1996. She is a trained mediator and sits as an arbitrator. She is on the panel of arbitrators of AIDA vii viii Authors’ Biographies Reinsurance and Insurance Arbitration (UK) (ARIAS). She chairs and speaks at conferences on insurance and reinsurance law and has written widely in those areas. Alison is recognised by the forthcoming edition of Chambers Directory of the Legal Profession as a leader at the Bar in the field of insurance law. Alison Padfield Alison Padfield is a barrister at Devereux Chambers specialising in commer- cial law, insurance and reinsurance and professional negligence. She studied law at Oxford University and holds Master’s degrees from both Oxford Uni- versity and the University of Brussels. She is the author of Insurance Claims (2nd edition, 2007). Christopher Henley Christopher Henley, a Fellow of the Chartered Insurance Institute, is a Coun- sel specialising in insurance and reinsurance at the London office of Debevoise & Plimpton LLP. His publications include The Law of Insurance Broking and All Risks Property Insurance (co-author, which won the British Insurance Law Association prize in 1996). He is a Contributing Editor of The Encyclopedia of Insurance Law and Astor’s Law of Lloyd’s, and has contributed chapters to Reinsurance Practice and the Law, Insurance Disputesand Privity of Contract. He is a member of the Accident Committee and the Advanced Study Groups Committee of the Insurance Institute of London, and the British Insurance Law Association committee on Insurance Contract Law Reform. He has also been elected a Vice President of the Insurance Institute of London. Dr Baris Soyer Dr Baris Soyer is a reader in commercial and maritime law at the University of Wales, Swansea and has previously lectured at the Universities of South- ampton and Exeter. He is currently a member of the Institute of International Shipping and Trade Law, British Insurance Law Association, British Maritime Law Association, Society of Legal Scholars, and the Higher Education Acad- emy. He is the editor of the Journal of International Maritime Law and is also on the editorial board of Shipping and Trade Law and Baltic Maritime Law Quarterly. His first book, Warranties in Marine Insurance, was the joint winner of the Cavendish Book Prize 2001. This book has also been awarded by the British Insurance Law Association Charitable Trust for its contribution to insurance literature during 2001–2002. Dr Soyer is currently involved in the teaching of marine insurance law and admiralty law at LLM level. CONTENTS Preface v Authors’ Biographies vii Table of Cases xiii Table of Legislation, Conventions and Rules xxvii 1. AN INTRODUCTION TO INSURANCE AND INSURANCE LAW 1 Introduction to insurance 1 Formation of an insurance contract 6 Premium 11 Privity and third-party rights 16 Insurable interest 20 Insurance intermediaries 23 Regulation of insurance in the U.K. 30 Test your understanding 34 2. UTMOST GOOD FAITH 37 Elements of the duty of utmost good faith 37 Non-disclosure: materiality of facts and inducement 39 Facts material to insurance contracts 45 Misrepresentation 55 A post-contractual duty of good faith? 59 Agents and the proposal form 63 Remedies for breach of duty 67 The insurer’s duty of utmost good faith 70 Practice and reform 71 Appendix: The relevant provisions of the Marine Insurance Act 1906 74 Test your understanding 75 3. TERMS OF INSURANCE AGREEMENTS 79 Construing insurance terms 79 Warranties 85 Conditions precedent 95 Innominate terms 100 Exclusion clauses 102 Test your understanding 104 ix
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