CODES OF PRACTICE

DOIhttp://doi.org/10.1111/j.1468-2230.1977.tb02452.x
AuthorJohn Birds
Publication Date01 Nov 1977
CODES
OF
PRACTICE
THE
STATEMENT
OF
INSURANCE
PRACTICE-
A
MEASURE
OF
REGULATION
OF
THE
INSURANCE
CONTRACT
THE
law provides a wide range of
"
technical
"
defences potentially
available to an insurer wishing to avoid liability under his policy.
By
"
technical
"
is meant a legally valid, though morally dubious,
point, outstanding examples of which are the rights of an insurer
to avoid
a
policy for innocent, immaterial non-disclosures or
breach of warranty and to avoid a claim for innocent, immaterial
breach of condition. As few insurance cases reach the courts, it
is difficult to know to what extent insurers rely on such defences,
except where there are suspicious circumstances. Certainly spokes-
men for the insurance industry have frequently been at pains to
stress that it is only where they suspect fraud, but would find it
difficult to prove, that they use these defences.'
That this may well be the case seems to be the main reason why
there has been little pressure for control over the terms and con-
ditions of insurance policies from consumer bodies and the like.a
From
a
policy point of view, however, it seems highly questionable
that insurers should be permitted effectively to remain judges in
their own cause, and suggestions for reform of many aspects of
insurance law have increased in number in the last few years.3
Potentially the most far-reaching recommendation, perhaps, was
that in the Law Commission's
Second Report
on
Exemption
Clauses
(no.
69)
that the terms and conditions of insurance policies
be subject to the fair and reasonable test in their draft Bill-which
in large measure, of course, became the Unfair Contract Terms
Act."
1
Whether true or not now, this can hardly be said of many older cases; see. for
example, the sanction by the House of Lords of the use of these defences in
Dawsons
Ltd.
v.
Bonnin
[1922]
2
A.C. 413 and
Glicksman
v.
Lancashire
&
General
Ins.
Co.
[1927] A.C. 139. There are still modern cases-see for example, the attempt to
defeat the claim on a wholly unmeritorious point
so
far as the plaintiff was con-
cerned, in
Murray
v.
Legal and General Ass. SOC. Ltd.
[
19701
2
Q.B. 495.
2
Some small measures of control over life policies followed the recommendations
of the
Committee
on
Property Bonds and Equity Linked Life Assurance,
Cmnd. 5281
(1973) (the Scott Report); see Insurance Companies Amendment Act 1973,
s.
50,
soon
to be implemented.
3
See, for example,
Fifth Report
of
Low Reform Committee (Conditions and
Exceptions in Insurance Policies),
Cmnd. 62 (1957);
Consumer Council Study
on
Insurance
(1970); the articles by Hasson, in particular in (1969) 32
M.L.R.
615
(non-
disclosure); (1971) 34 M.L.R. 29 (warranties) and
New Society,
July 19, 1973;
Report
of
the New Zealand Contracts and Commercial Law Reform Committee
on
Aspects
of
Insurance Law
(1975). The EEC is considering a Draft Directive
on
Insurance Law, though as a harmonisation measure, it seems, rather than a con-
sumer protection device; if introduced, however, it will be to the benefit of
insureds in some respects. See also the White Paper,
Insurance Intermediaries,
Cmnd.
6715 (1977).
4
Although insurance itself was hardly mentioned by the Law Commission in the
Report and the preceding Working Paper, it was clearly intended to be covered by
their general recommendations.
677

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