Critically appraise the Joint Law Commission proposals for the reform Essay

Critically appraise the Joint Law Commission proposals for the reform of the law relating to Business Insureds, considering furt - Essay Example Business Insureds can be divided into their components so the Commission’s proposals can be critically analysed. Duty of Disclosure The law of disclosure is famously referred to in the section 18 of MIA. It states that the insured must provide every material circumstance that it knows or ought to know in the ordinary course of its business (Joint Law Commission Report, 2012, p. 7); both the insurer and the insured owe a duty of utmost good faith to each other (Brook, 2012, p. 21). In Goshawk Dedicated Ltd v Tyser & Co Ltd it was held that utmost good faith was not free standing but formed the basis for implicating a term (Gurses, 2013, p. 77). The need for change (proposal) arose from the 2007’s section that a business insured only needs to provide volunteering facts that an insurer would want to know (Palmer, Mackie, Davies & Marris, 2012). To rectify this, the Commission’s proposal retains duty of the insured for providing all material facts that any reasonable insurer would want to know. ... For instance, in practice, strict adherence to MIA can sometimes produce results that are unjust or inappropriate for the insurer (Joint Law Commission Report, 2012, p. 38). Although the Consumer Insurance (Disclosure & Misrepresentation) Act 2012 has addressed these issues in its proposal but concrete reforms in this regard are yet to come. Proposals for Non-disclosure and Misrepresentation The original Act of 1906 suggests that an insurer can only avoid the contract in only those areas where the insured is guilty of non-disclosure or misrepresentation (Joint Law Commission Report, 2012, p. 24). This does not do justice to the insurer as the losses by misrepresentation or failure to disclose material information can range from minimal to catastrophic (Joint Law Commission Report, 2012, p. 179). For this reason, the Commission’s proposal suggests defining this dishonest conduct (Joint Law Commission Report, 2012, p. 213). Two options in this regard are; either going for delibe rate or reckless, or the common law test of fraudulent conduct (Joint Law Commission Report, 2012, p. 213). So this is what the new picture looks like. If the misconduct on insured’s part is innocent or negligible then the remedy for the insurer is only proportionate to the amount of damages. This ‘leniency’ is because not all damages arise out of deliberate fraud or misrepresentation. In Economides a 21-year-old man placed the contents of his flat below their market value when his parents moved in with him, the Court of Appeal considered his statement an opinion rather than a fact. As it was made in honest good faith it did not have to be reasonable (Summer, 2013, p.