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J. BIRDS
31
Reforming insurance contract law in the UK
Professor John Birds,
Emeritus Professor, School of Law, University of Manchester
Honorary Professor, School of Law, University of Sheffield
Honorary Professor, School of Law, University of Exeter
For many years key aspects of British insurance contract law have been the
subject of criticism by judges, academics and other commentators, primarily on
the basis that it was capable of operating unduly harshly as against an insured or
policyholder, even if in practice, at least in recent years, it may not always have
had that harsh an effect.
1
Two sets of official recommendations were made in 1957
and 1980,
2
but these were not enacted as doctrinal law and there is no doubt that
British law was out of line with that of many other countries, both common law
and civil law jurisdictions. Some ten years ago, the Law Commissions of England
and Wales and of Scotland embarked on a major project to reform the law and that
has now borne fruit in terms of two statutes – the Consumer Insurance (Disclosure
and Representations) Act 2012 and the Insurance Act 2015. This short piece seeks
to introduce two of the major reforms therein, namely those concerning the pre-
contractual duty of the insured and the law of warranties.
Pre-contractual duties of the consumer insured
It is fairly widely known that traditionally UK law required an insured not simply
not to misrepresent material facts prior to the contract but also to disclose those
facts of which he had knowledge. Materiality depended on what a prudent insurer
would want to know and it mattered not whether or not the insured knew that he
was under a duty of disclosure. Someone could act in good faith, but not with the
utmost good faith that the law required.
1. Especially as far as consumer insureds and to some extent small business insureds are concerned, by
virtue of Statements of Insurance Practice, the approach of the Insurance Ombudsman Bureau and sub-
sequently the Financial Ombudsman Service and the rules of the Financial Conduct Authority. For a brief
survey, see
Birds’ Modern Insurance Law
, 9
th
edition, 1.8 ff.
2. Law Reform Committee, 5
th
Report, 1957, Cmnd. 62; Law Commission Report No. 104, 1980, Cmnd.
8064.