The Law Commissions have issued revised proposals for the reform of insurable interest. It is seeking views on the following proposed reforms:
- An insurance contract should be valid if the insured has at the outset of the policy a reasonable prospect of acquiring an insurable interest during the life of the policy;
- The crucial issue is whether there is an insurable interest at the time of the loss (although for contingency insurance (mainly life and personal accident insurance), insurable interest must be present at the time of the contract);
- A refund of premiums should always be available where the contract is void;
- There should be no statutory limit on the amount for which the insured may obtain insurance over the life insured;
- Co-habitants (living together as spouses) should have an insurable interest in the life of the other, irrespective of whether they can show economic loss;
- Parents should be able to take out insurance on the lives of their children of any age, without evidence of economic loss;
- Trustees should have an unlimited interest in the lives of the members of any group scheme;
- Employers should have an unlimited interest in the lives of their employees (when entering into a group scheme whose purpose is to provide benefits for the employees or their families).
The closing date for responses is 29th June 2015.