Last year, the Law Commission questioned whether Section 53 of the Marine Insurance Act 1906 (the MIA) should be reformed (Issues Paper 8) and whether Section 22 of the MIA should be repealed (Issues Paper 9). A summary of responses to each of these papers has been published.
In Issues Paper 8, the Law Commission looked at section 53 of the MIA, the principal effect of which is to make a broker directly responsible to an insurer for the payment of premiums. It put forward the view that the default position should be that the broker is not personally liable to pay the premium. The default position should be that policyholders are liable for the premium payments due under their insurance policies. The majority of consultees agreed with the proposal, although some thought special considerations might apply to marine insurance that justified a different default position. Most consultees also thought that there ought to be complete freedom of contract, a number stressing that paternalism was not justified and that insurers ought to have sufficient bargaining power to negotiate a different position. The majority of consultees agreed that Section 53(1) should be repealed rather than be replaced.
In Issues Paper 9, the Law Commission looked at Section 22 of the MIA, which states that a contract of marine insurance is inadmissible in evidence unless it is "embodied in a marine policy". The Law Commission found that the concept of the policy as distinct from the contract appears to be of little remaining significance, save to the extent that a lien can be exercised over it under section 53(2) of the MIA, and that the transfer of the policy document can be used to assign claims under it. The majority of consultees agreed that Section 22 should be repealed so that a marine policy is no longer required for a contract of marine insurance to be proved in court. No consultee indicated that repealing Section 22 would have any significant practical effect, above and beyond aligning law with current practice. The majority of consultees agreed that there was a need for the broker's lien to be clarified by statute.