Policies and Perceptions of Insurance Law in the Twenty First Century

Policies and Perceptions of Insurance Law in the Twenty First Century

by Malcolm Clarke

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Overview

This book offers a lively, critical introduction to the subject of insurance law, presenting the rules in both their legal and socio-economic contexts. It examines the growth of contemporary 'compensation culture' and assesses the culture's impact on the development of insurance law and policy. Throughout, the presentation of the English law of insurance is placed in comparative perspective, with broader contract law and the law from the US, Europe and Australia.

Product Details

ISBN-13: 9780199227648
Publisher: Oxford University Press, USA
Publication date: 07/06/2007
Series: Clarendon Law Series
Pages: 408
Product dimensions: 9.10(w) x 6.10(h) x 0.90(d)

About the Author



Malcolm Clarke is Professor of Commercial Contract Law in the University of Cambridge.

Table of Contents


Bibliographical and Other Abbreviations     xix
Table of Cases     xxi
Table of Legislation     xxxii
Policyholders     1
Risk     2
Risk Aversion     3
Stress Aversion and the Purchase of Peace of Mind     3
Litigation     4
Aversion to Litigation     4
Conditional Fee Agreements     5
A Compensation Culture?     6
The Claims Crisis: Cloud or Mirage?     7
The Response of the Courts     8
Clouds on the Horizon     10
Premiums     10
Insurers: Spreading Risk     11
People: Assessing Risk     12
Homo Oeconomicus     12
Knowledge of Risk     14
Experience of Risk: Media Impact     15
Headlines     15
The Quality of Reporting     17
Freedom from Distraction     18
The Context of Society: Time and Place     18
Compulsory Insurance     20
The Demand for Insurance     21
The Insurance Marketplace     22
Traditional Products     22
Meeting Current Needs     24
The Choice of Insurer     25
Insurable Interest     26
Insurable Interest in Life     27
Ties of Affection     27
Dependence     28
The Problem of Finding a Rational Basis     29
Insurable Interest in Property     31
Buyers     33
Bailees     33
Builders     34
Insurable Interest: Why?     36
Gambling     36
Temptation and Moral Hazard     36
Removing both the Temptation and the Rule of Law     37
Insurers     39
The Emergence of Insurers     39
A Brief History     40
Lloyd's     40
Niche Insurers     42
Meeting or Making the Need     42
Publicity     42
Trains and Boats and Planes     43
Mutuality     44
Inspiring Confidence     46
An Image of Trustworthiness     46
An Image of Security     47
Risk Prediction     48
Risk on the Ground     48
Apres Moi la Deluge: Clouds on the Horizon     50
Asbestosis     50
Climate Change     51
Risk at Law     52
Closing the Door: Risk Control and Risk Management     53
Measures of Prevention     53
Sharing Information: Collective Action     54
Loss Limitation and Cure     55
Insurance Intermediaries     57
Agents and Independents     58
Regulation     60
Authorization in the United Kingdom     60
Codes of Conduct     60
The Insurance Mediation Directive     61
Rules and Principles: ICOB     61
Scope     61
Core Principles     62
Information Duties     63
Contracting Insurance     64
Integrity: Commission     64
The Nature of Independents' Duties to Customers     65
Payment: Fee or Commission     66
The Problem of Consideration     66
The Problem of Consent     67
Conflicts of Interest: Spitzer     68
The Quality of Advice     69
Objectivity: Due Skill, Care, and Diligence     69
Subjectivity: Suitability of Advice     71
The Content of Advice     71
Rating Insurers     71
Policy Terms     72
Contracting Insurance     72
Disclosure      73
Renewal     74
Claims     74
The Liability of Independents     76
Contract and Tort     76
Third Party Beneficiaries     76
Remedies     78
Causation: Must Clients Check Their Policy?     79
Loose Ends: Limitation     80
Problems     81
Performance     81
Profitability     81
Contracting     83
Contract Formation     84
Documentation     85
Expectations of Cover     86
Expectations of Speed and Courtesy     88
Terms Offered     90
Unconditional Acceptance     91
Renewal and Variation     92
Flawed Consent     94
Mistake     94
Misrepresentation     95
Fact     95
The Value and Importance of Belief: Good Faith     96
Belief in Value and Importance: Underinsurance     97
Non-disclosure     98
The Duty of Insurers     99
Cover     99
Performance     101
The Duty of Applicants     101
Proof of Disclosure and Non-disclosure      102
Disclosure to Whom     102
The Prudent Insurer     103
Information Known to the Applicant     105
Information Known to the Insurer     106
The Problem of Information Retrieval     107
Marine and Non-marine Insurance     109
Facts that Diminish Risk     110
Waiver     110
Waiver of All Information     111
Waiver of Certain Information by Implication     112
Waiver of Certain Available Information     113
The Time of Disclosure     113
Disclosure or Investigation: Whose Line is it Anyway?     114
Remedies     116
Damages     116
Rescission     116
Effect in Law     116
Limits on the Right to Rescind     117
The Financial Ombudsman Service to the Rescue     119
Reform     119
The Australian Rule: The Reasonable Insured     120
The Swiss Rule: A Reasonable Response to Questions     120
The ELC's Reasonable Insured of that Kind     122
The French Rule: Proportionality     123
The American Rule     124
Conclusion: More Questions     126
Contracting Through Agents      128
The Problem of Persona     128
Authority     128
Split Personality     129
The Problem of Advice     131
Premium     132
Payment     132
Late Payment     133
Days of Grace     133
Mode of Payment: Direct Debits     134
Cover     136
Policies of Insurance     137
A Large Role for Small Print     137
Standard Forms     138
Words: The Rules of Interpretation     139
The Importance of Context     142
Words: The Problem of Comprehension     145
Comprehension by Courts     145
Comprehension by Policyholders     145
The Myth of Ordinary Meaning and Plain English     147
The Limits of Dictionaries     148
The Language of Precedent     149
Planes of Precision     150
Unexpected Effects     151
The Reasonable Expectations of Policyholders     153
The Use of Words: Terms of the Contract     155
Exceptions     157
Warranties     157
Exceptions, Warranties, and Causes     159
Problem: Distinguishing between Exceptions and Warranties     160
The Problem of Aggravation of Risk     161
Knowing Where You Are     161
Future Shocks     164
Continuing Warranties     164
Law Reform     165
The Prudent Uninsured: Unreasonable Care     166
The Response of Reasonable Policyholders     166
The Response of Reasonable Judges     167
Premium Incentive     169
Risk Management     170
Liability for Careless Advice     171
The Insurance Relationship     172
Nature     172
Duration     173
Flexible Friends Measures for the Unexpected     174
Rights of Renewal     175
Reality Check     175
Duress     176
Good Faith     177
Automatic Continuation     178
Where Next?     179
Claims: Taking the Drama out of the Crisis     181
The Claim     182
Loss     183
Causation     184
Rules of Construction     184
Or Common Sense?     185
Common Perils     188
Fire     188
Personal Accidents      189
All Risks     190
Liability     192
Loss     192
The Event     193
Occurrence     194
Loss Arising out of One Event: Highjacked Aircraft     196
Claims     197
Proving the Claim     197
Loss Adjusters     199
The Reality of Fraud     200
The Importance of Fraud     201
The Meaning of Fraud     202
Material Falsehood     203
Wishful Thinking     204
Exaggeration     205
Proof of Fraud     206
The Effect of Fraud     206
The Effect on the Claim     206
The Effect on the Contract     207
The Effect of Rescission     208
The Case of Joint Insurance     208
Countering Fraud     209
Image Problems     209
Better Information at the Underwriting Stage     210
Better Information at the Claims Stage     211
Surveillance and Human Rights     213
Reinstatement     214
Technical Defences     215
Non-disclosure     215
Late Notice     216
Reasonable Notice      216
Seven Days' Notice     216
Breach: Prejudice     217
Recoverable Loss     219
Measure of Loss     220
Cutting Losses: Policyholders     221
Duties     221
Assumption of Responsibility and Risk     222
Cost in the Absence of a Duty to Mitigate     223
Cost in Performance of a Duty to Mitigate     224
Cutting Losses: Insurers     226
Salvage     226
Advice to Mitigate Loss     227
Disincentives and Discounts: The Insurer as Supplier     227
Compromise and Settlement of Claims     228
Undue Influence     229
The Nature of Undue Influence     229
Direct Influence and Indirect Influence     230
Notice     231
Independent Advice     231
Effect in Law: Rescission     232
Abuse of Bargaining Power: Victimization     232
Duress     233
The Power of Information: Information Imbalance     234
Enforcement of Claims in the Courts     236
Claims Arbitration     237
Ombudsmen     238
The Financial Ombudsman Service (FOS)     239
Perceptions from Within and Without     239
Jurisdiction     241
Claims Procedure     242
Law and Market Practice: Justice Certain and Justice Seen     243
Compensation for Late Payment     244
Distress     247
Insolvency     247
Watchdogs that Bark too Late?     248
The Financial Services Compensation Scheme     249
Insurance and Society     251
The Role of Insurance     251
Moral Hazard     252
Carelessness     253
Uninsurable Loss: Intentional Injury     255
Deliberate Damage     255
Deliberate Injury     255
Expected Loss     256
Public Policy     257
Liability Cover     257
Compulsory Liability Cover     259
Personal Accident Cover     260
Certainties     261
Wilful Misconduct     263
Regulating Contract Terms     264
Validation     265
Interpretation by the Courts     266
Relative Truth     266
Safety Practice     266
The Effectiveness of Reliance on the Courts     267
The EC Directive 1993      268
The Scope of the Regime     268
Plain and Intelligible     268
Core Terms     269
Unfairness: Good Faith in English Courts     269
The Grey List     271
Good Faith in English Legal Literature     272
Enforcement of the Regulations     273
Self-regulation: Codes     274
Parliament and the FSA     274
The Role of the Courts     275
Social Engineering     276
The Problem of Information     277
Riding Unruly Horses     278
The Role of Counsel     280
The Role of Judges     283
The Response of the Courts     285
Insurance Law and Society     287
Economic Efficiency and Subrogation     287
Fairness     290
Classification of Risk     290
Discrimination     292
Insurance Discrimination     293
Unfair Discrimination     293
Unfair Sex Discrimination     294
Unfair Disease Discrimination     295
Genetic Tests     296
Insurers as Licensing Authority     298
The Public 'Right' to Cover     299
The Insurers' Right to Select Risks      299
Insurance and Law     302
The Insurer as God?     302
The Effect of Insurance on Rules of Law     303
Insurers and the Conduct of Litigation     303
Discovering Whether Insurance Exists     304
The Effect of Existing Insurance: in Theory     305
The Effect of Existing Insurance: in Practice     306
Invisible Effects: Development in the Courts     308
Vicarious Liability     309
Nuisance and Pollution     310
Res Ipsa Loquitur     311
The Duty of Care     311
Dirty Work     312
Dirty Play     313
The Standard of Care     313
Damages     315
Visible Effects: in Parliament     316
The Insurers' Voice     316
The Insurers' Limits     317
The Insurers' Fears and the Power of Persuasion     318
The Lessons of Insurance     318
Visible Effects: in the Courts     319
Available Insurance     319
Efficient Insurance     322
Tort: Loss or Liability Insurance-in General     325
Tort: Loss or Liability Insurance-Commercial Practice     330
Contract: Terms      331
Contract: Damages     332
Conclusion     333
The Sequel: Perceptions of the Past and of the Future     334
Certainty and Security     334
Certainty of Law     336
Certainty of Insurance Law     337
The Nature of People     341
Expectations of Speed and Convenience     341
Distrust     342
Trust: Image     343
Trust: Information     343
The Law of Cooperation     344
The Nature of Law and Language     345
Language     345
Lawyers     346
The Nature of Insurance Contracts     347
Definition or Description?     347
Statutory Definitions     348
The Financial Services and Markets Act 2000     348
The View of the FSA     349
Features Required by the Courts and Common Law     350
Rough Edges     351
Distinguishing the Payment of Contract Damages     351
Conflicting Purposes     352
The Nature of Insurance Contract Law     352
Common Law: Similarities     353
Common Law: Differences     354
Statute      356
Contract or Contracts?     357
Index     359

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