The Law of Insurance Warranties: A Problem Incapable of Solution?

Abstract

The law of insurance warranties has long been the source of controversy. Until the Insurance Act 2015 became law, warranties in the UK were governed by the provisions of the Marine Insurance Act 1906, moderated to some extent by the efforts of the judiciary. The historic regime was widely regarded as flawed, tilting the playing firmly and unreasonably in favour of insurers. The Insurance Act sought to introduce radical reform to the law governing breaches of insurance warranties with the objective of addressing the past deficiencies. The primary objective of this thesis is to examine whether it is possible to develop a methodology for dealing with breaches of insurance warranties and other terms that delivers balanced, reasonable and predictable outcomes. The thesis dissects the range of issues that any reform must seek to address and evaluates the Law Commission’s extensive efforts, over many years, to reach a satisfactory outcome. The thesis critically examines and compares and contrasts efforts to reform the law in Australia, New Zealand and the UK. Through a process of analysis and stress testing of each regime against the facts of a range of historic cases, the thesis demonstrates that that each of these differing approaches to reform contains critical flaws. Moulding elements from the approaches in each jurisdiction, together with innovative new proposals, this thesis outlines an innovative approach which seeks not only to overcome the shortcomings of the historic regime, but also the flaws in the differing attempts at reform. These proposals are then validated by subjecting them to a rigorous regime of stress testing against the facts of the same of historic cases. This analysis demonstrates that the proposals provide robust, equitable and largely predictable, outcomes against a wide range of possible scenarios; as such they could form the basis for reform in common law jurisdictions yet to implement change to this sphere of the law.