Law Commission wants insurance law reformed but BBC makes mistake

by scotslawstudent

I was watching BBC Breakfast this morning and they were covering the story of consumers losing out to insurers by mis-over-use of the disclosure requirement. I absolutely hate the disclosure requirement. I consider it to be the most excessive power anyone can have. It has almost entirely put me off getting insurance (but really makes me want to sell insurance.)

That said the report isn’t perfect. It claims that the law comes from the 1909 Marine Insurance Act “because back then insurance was mainly used for shipping.” This personally gives the impression that people are subject to laws which are being shoehorned into positions they shouldn’t be. It’s disingenuous to reality and misunderstands how law is made — the 1909 Act didn’t make the law on insurance, it codified much older common law principles which applied to many different situations dealing with insurance. It also ignores that there’s a lot of analogies in common with insuring a ship and insuring anything else. You pay the premium and when it gets damaged you claim on the insurance. Fundamentally insurance is insurance. It’s the selling to consumer element that complicates matters, rather than the insurance part.

It’s also not true. The clue’s in the name, if you need an act of Parliament to deal with marine insurance specifically that suggests that insurance is a substantial area of law and shipping is a part of it. 1906 was a long time ago to us young folk but it’s not the middle ages, people still insured their houses and cars in 1906. Certainly shipping has always been a huge part of the insurance trade — initially it was the only sort of insurance that had been invented. If Parliament had passed the Marine Insurance Act two hundred years earlier in 1706 it would have been called the Insurance Act.

The Marine Insurance Act only applies to marine insurance. I don’t think I’ve changed many lives by saying that. However, in codifying the common law as it relates to marine insurance, Parliament set out what the common law relating to insurance was in general. The reason that a lawyer would go to the Marine Insurance Act to deal with insurance that’s not marine is that it sets out the common law position at the time on all insurance, whether marine or otherwise, in one place. They then rely on authorities that are applicable to the particular case.