Chapter 5 Flashcards
Process of being on risk at Lloyds London
When an insurer signed a slip the contract was formed. At a later date the slip was replaced with a second contract referred to as the policy.
What is MRC
A market reform contract. Which also provided contract certainty in the insurance market.
Signing down is now an express contractual provision under the MRC
In insurance, what must the parties have reached an agreement on?
The nature of the risk
The duration of the contract
The amount of the premium
What does lack of fair presentation result in?
A failure in consideration
Formal requirements of insurance contracts.
- Contracts by deed - no legal requirement for any
- in writing - Marine Insurance policies must be in writing (only needs name of insured or agent, signed by or on behalf and have the subject matter with reasonable certainty)
Motor vehicle insurance and life insurance
What are the main statutes covering insurance companies?
Financial Services and Markets Act 2000
Financial Services Act 2012 (which says the PRA - banks and solvency FCA - all firms for conduct of business issues and regulate)
What is Insurable Interest?
Legal right to insure arising out of a financial relationship recognised at law.
Key elements:
- subject matter of insurance
- economic or financial interest
- current interest (Lucena v craufurd - ship)
- Legal interest (Macaura v northern assurance, timber case)
Why does the law require insurable interest?
To reduce moral hazard
To discourage wagering
Insurable interest may arise from Common law (auto assumed to exist) or Contract
What is the statute governing Marine Insurance
Marine Insurance Act 1906
For Marine Insurance when is insurable interest required?
The insured must be interested in the subject matter at the time of the loss. There is no requirement of insurable interest when the contract is made.
What statute governs life insurance?
Life insurance Act 1774
What are the 4 major provisions in the life insurance act to prevent gambling?
1-Person benefitting must have insurable interest in the life or event
2- The name of the person for whose benefit must appear on the policy
3- The insured can recover no more than the amount of value for their interest
4- The act does no apply to insurances on ships, goods or merchandise.
Can the requirement for insurable interest be waived?
No, under Marine Insurance Act 1906 and Life Assurance Act 1774 they cannot. Although this does not mean that insurers don’t doubt insurable interest.
How does insurable interest apply in Family Relationships?
Own life - unlimited interest
Spouces - unlimited (Married Womens property act 1882)
Other family -no other family members give rise to insurable interest
How does insurable interest apply to Business relationships?
Employer and Employee - Employee can insure employer for the interest to their min notice period
However, key workers can be larger amounts
