Overview

This book assesses the role of the doctrine of insurable interest within modern insurance law by examining its rationales and suggesting how shortcomings could be fixed. Over the centuries, English law on insurable interest – a combination of statutes and case law – has become complex and unclear. Other jurisdictions have relaxed, or even abolished, the requirement for an insurable interest. Yet, the UK insurance industry has overwhelmingly supported the retention of the doctrine of insurable interest. This book explores whether the traditional justifications for the doctrine – the policy against wagering, the prevention of moral hazard and the doctrine’s relationship with the indemnity principle – still stand up to scrutiny and argues that, far from being obsolete, they have acquired new significance in the global financial markets and following the liberalisation of gambling. It is also argued that the doctrine of insurable interest is an integral part of a system of insurance contract law rules and market practice. Rather than rejecting the doctrine, the book recommends a recalibration of insurable interest to afford better pre-contractual transparency to a proposer as to the suitability of the policy to his or her interest in the subject-matter to be insured. Providing a powerful defence for the retention of insurable interest, this book will appeal to both academics and practitioners working in the field of insurance law.

Full Product Details

Author:   Franziska Arnold-Dwyer
Publisher:   Taylor & Francis Ltd
Imprint:   Routledge
Weight:   0.453kg
ISBN:  

9780367076672

ISBN 10:   0367076675
Pages:   242
Publication Date:   02 June 2020
Audience:   College/higher education ,  Professional and scholarly ,  Tertiary & Higher Education ,  Professional & Vocational
Format:   Hardback
Publisher's Status:   Active
Availability:   In Print  
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Table of Contents

"TABLE OF CONTENTS Introduction The historical development of the insurable interest requirement Formative period Insurable interest under the lex mercatoria and common law Wager and wager policies Early legislation The Marine Insurance Act 1746 The Life Assurance Act 1774 Consolidation The Gaming Act 1845 The Marine Insurance Act 1906 The Gambling Act 2005 The legal bases for insurable interest Legal bases Marine property Non-marine goods Buildings and land Profit and future income Life Liability Debtor’s property and debtor’s life Debt Reinsurance Timing and consequences of lack of insurable interest Marine insurance Life insurance Non-marine goods, buildings and land, and liability insurance Defence of lack of insurable interest The courts’ strategies to ""lean in favour of an insurable interest"" The defence of lack of insurable interest and good faith Waiver and assignment Marine insurance Life insurance Non-marine property insurance The meaning of insurable interest Property insurance The classic definition of insurable interest Expanding the meaning of insurable interest Expanding insurable interest to pervasive interests Pervasive interest –v- legal interest test –v- moral certainty test Has the notion of pervasive interest become obsolete? Life insurance Pecuniary interests Presumed interests Statutory extensions A new approach to insurable interest: Feasey The principles Construction Ward LJ’s dissenting judgment Reception and analysis Insurable Interest – Quo Vadis? The LC’s proposals The case for reform of the doctrine The IIB Would the IIB address the issues identified? Academic debate Examining the Traditional Justification Abolition Retention and expansion Remedies Foreign law approaches Australia US / New York Canada Germany South Africa People’s Republic of China Themes for reform The anti-wagering justification Wagers and insurance distinguished Doctrinal distinction Economic analysis Public policy and the differentiation between insurance and wagers Policy on gambling Policy on insurance Reasons against gambling by insurers Dividing line for tax treatment Dividing line for takaful insurance Policy against wagering under the guise of insurance Sham transactions Misrepresentation Unintentional wager policies Contracts of insurance differentiated from CDS What are CDS? CDS and insurance contracts distinguished Restraining effect of insurable interest requirement The anti-wagering justification and the definition of insurable interest The moral hazard justification Historical background and economic analysis Criticisms Doubtful deterrent effect Reverse moral hazard Inappropriateness of contract law ‘Skin in the game’ in property insurance How does an insurable interest constitute skin in the game? Relationship with other anti-moral hazard techniques Relationship between insurable interest and moral hazard restated Moral hazard in the capital markets Moral hazard and STOLI Moral hazard and the definition of insurable interest The indemnity justification The indemnity principle Criticisms The relationship between the doctrine of insurable interest and the indemnity principle The indemnity justification and the definition of insurable interest Indemnity dependent on nature and extent interest Multiple claims Valuation The integral dimension of insurable interest – insurance contract law Utmost good faith and pre-contractual risk presentation Utmost good faith Pre-contractual risk presentation under the IA 2015 Pre-contractual representations under CIDRA Causation No interest Economic interests Consequential loss Duty to mitigate loss Duty to prevent, avert and mitigate loss Reasonableness and insurable interest Failure to mitigate as an intervening cause Abandonment Subrogation Relationship with the doctrine of insurable interest Rights of action against third parties Significance of abandonment and subrogation The integral dimension of insurable interest – policy terms Methodology for survey Insurable interest and title requirements Clauses requiring loss and exclusion of consequential loss Retention, deductibles and limits of liability Loss prevention and loss mitigation Risk Control Terms Notice of loss Claims conditions Basis of settlement (reinstatement and repairs) Subrogation provisions Insurable interest as part of contractual fabric The definitional dimension of insurable interest Historical background to definition of ‘contract of insurance’ Doctrinal analysis of definition of ‘contract of insurance’ Interest –v- insurable interest in property insurance Definition for regulatory and tax purposes Conceptual analyses Abraham’s four conceptions of insurance Merkin and Steele’s models of insurance Insurable interest and market perception Definitional role Economic interest Reconciliation between definitional and validity roles Route A: contracts with ‘interest’ but without ‘insurable interest’ Route B: non-insurance contracts under the guise of insurance Consequences of falling outside definition Consequences for policyholder Consequences for insurer Remedies, enforcement and reform Evaluation of remedies regime Fairness Effectiveness and enforcement Interference with the parties’ contract Remedial gap between legal consequences and regulatory sanctions Authorization and permissions Prudential regulation Conduct of business regulation FOS Insurers’ duties in relation to insurable interest Suggested wordings The duty to decline A regulatory product information requirement Legal bases for the duty to decline and the regulatory product information requirement Benefits and detriments Conclusion"

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Author Information

Dr Franziska Arnold-Dwyer, Lecturer in Insurance Law and Deputy Director of the Insurance, Shipping & Aviation Law Institute at the Centre for Commercial Law Studies, Queen Mary University of London.

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