It was good to see in the report by Emma Jones concerning the Law Commission's paper on breach of warranties that Chris Hannant of the ABI is prepared to look at any change in the law benefiting customers as well as the effect on the insurers which they represent (News, 4 January).
As far as the insured is concerned, any reforms will create greater certainty in that claims will be met, whereas in the past there have been problems.
While any proposals adopted will overturn established principles in insurance contract laws in the UK, it must be remembered that in this country, we are out of step with the law in other countries in Europe and the rest of the world.
Insurers must be keen to avoid the danger of foreign countries not placing insurance in the London market where policies will be subject to a UK jurisdiction clause, thus causing loss of business.
It must also be borne in mind that the Marine Insurance Act of 1906, on which our present insurance law is based, was not a reforming act, but was intended to codify existing common law decisions.
So for the first time there is now an opportunity to bring our insurance contract law up to date.
Also, as far as warranties are concerned, the proposals will implement to a great extent the Law Commission's recommendations in its report of 1980 which has gathered dust on the shelf for far too long.
Any continuous breach of warranties by an insured, not causing a loss, would be considered by an insurer to be a moral hazard and could always result in the insurance being cancelled under a cancellation clause in the policy, although insurers are reluctant to take this step.
And even if there were not such a clause in the wording, the final sanction could be that the insurer does not offer renewal terms which would be something any insured would wish to avoid.
I and my colleagues consider the Law Commission's first two discussion papers to be a thorough and comprehensive review of two important aspects of the current law and we look forward to the third paper on intermediaries to be published next month in the hope they will be of a similar calibre.
Derrick Cole, Past chairman and secretary, British Insurance Law Association sub committee which reported to the Law Commission on insurance contract law reform
