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RISK IN CONTEXT

UK Reforms Could Prompt Changes to Local Marine Laws

Posted by Jennie Page 15 November 2016

The UK Insurance Act 2015 has been reformed, with requirements related to the duty of utmost good faith, non-disclosure, breach of contract, remedies for breach of duty and contract, and warranty provisions having been updated. 

As a result, work is being done to assess whether Australia’s Marine Insurance Act 1909 (MIA) should be harmonised with the UK’s new laws.

It should be noted that a number protection and indemnity clubs (P&I Clubs) are contracting out many of the Act’s new provisions. They appear to be adopting those sections which are more to their benefit.

In 2001 the Australian Law Reform Commission (ALRC) issued an in depth review of the MIA. But none of the recommendations were ever enacted. 

A sub-committee of the Maritime Law Association of Australia and New Zealand (MLAANZ) has now created an explanatory memorandum to be read in conjunction with a draft Bill for an Act to amend the MIA.

The draft Bill looks to amend the MIA in respect of the duty of utmost good faith, duties of disclosure and provisions relating to warranties. It introduces a new section regulating insurers’ rights to cancel marine insurance contracts.

These amendments are similar to those in in the UK Insurance Act 2015. The MLAANZ ‘s sub-committee’s view is that amendments are necessary to maintain the Australian marine insurance market’s competitive position and achieve legal harmony with UK marine insurance law. They also allow for implementation of the key recommendations of the ALRC report.

The Australian marine insurance industry continues to explore perspectives on the possible amendments. If there is sufficient support for the reforms, appropriate amendments could be drafted for the industry’s consideration.

Below are potential amendments to the MIA:

  • The scope of the MIA should be amended so that provisions relating to the transport of goods for non-commercial purposes are removed and inserted into the Insurance Contracts Act.
  • The MIA’s coverage should be extended to include adventures on inland waters.
  • The concept of marine insurance warranties should be abolished.
  • The implied warranties of seaworthiness and legality should be removed.The requirements of disclosure and prohibition or misrepresentation should be modified so that the insured is required only to disclose those circumstances it knows to be material, or a reasonable person would know to be material.
  • The requirement for an insurable interest should be abolished.

The MLAANZ is seeking views from the insurance industry before any amendments are made to the MIA. 

It’s important to understand it’s not just the marine insurance industry that might be affected.

It also isn’t clear how much impact these recommendations will have if they are adopted, but they should not prompt substantial changes to clients’ insurance programs. It remains to be seen whether this will change premiums.

It’s worth noting there is currently no legislative proposal to amend the MIA. At the moment industry consultation is taking place and it’s important for the marine sector to get involved to ensure a wide variety of views are considered.

 

This blog is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. The information contained herein is based on sources we believe reliable, but we make no representation or warranty as to its accuracy. Marsh shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein. Any statements concerning legal matters are based solely on our experience as insurance brokers and risk consultants and are not to be relied upon as legal advice, for which you should consult your own professional advisers.

Related to:  Australia , Marine , Cargo

Jennie Page

National Practice Leader, Marine