Misrepresentation, Non-Disclosure and Breach ... - Law Commission

5.147 The insurer should not be permitted to rely on such a term if it would defeat
the insured’s reasonable expectations.
DIFFERENT RULES FOR DIFFERENT MARKETS?
5.148 In this section, we consider whether special rules are needed for different
markets. We deal in turn with marine, aviation and transport (MAT) insurance;
reinsurance; third party insurance; and small businesses. Our starting point is
that we should avoid creating artificial and complex boundaries unless it is strictly
necessary to do so. However, we welcome views.
Marine, Aviation and Transport insurance
5.149 The 1980 report excluded MAT insurance from the scope of its reforms. It argued
that the people working in this market were generally professionals “who could
reasonably be expected to be aware of the niceties of insurance law”. 38 The law
was certain and understood, and worked satisfactorily.
5.150 However, the Commission accepted that the line between MAT and other
insurance was not clear, and that some insureds, such as individuals with
pleasure craft, did need additional protection. The Commission expressed
unease with the definitions of MAT used in previous regulations, and suggested
some omissions. It also proposed that the Secretary of State should be
empowered to vary the definition by regulation.
5.151 Here we are not minded to make a distinction between MAT and other forms of
insurance, for three reasons.
(1) We are told MAT is no longer regarded as such a separate and distinct
form of insurance.
(2) It would be overly complex to require lawyers to apply one law to (for
example) major construction projects, and quite a different law to ships.
(3) The boundary between MAT and other insurance is extremely difficult to
draw and to draft. We would not only need to extend protection to
consumers who own pleasure craft but also many small leisure
businesses and fishermen who do not fall within the description of
professionals “who could reasonably be expected to be aware of the
niceties of insurance law”. The result would be complex regulations, with
arbitrary dividing lines.
In these markets, the parties are able to negotiate for the solutions they wish, and
our proposals allow the parties to do this.
5.152 We provisionally propose that the proposals made to the law for business
insurance should apply equally to marine, aviation and transport insurance.
38
Insurance Law, Non-Disclosure and Breach of Warranty (1980) Law Com No 104, para
2.8.
150