The UK Insurance Act 2015: The Shift in Marine Insurance Warranties Regime

To get over a century the English Marine Insurance Work 1906 has been keeping principles of marine insurance law regarding warranties which according to law bloggers became obsolete and away of market. These guidelines were susceptible to fundamental changes with The Insurance Work 2015 that may come into force on 12 Aug 2016. This is a fresh regime according to international standards proposed by what the law states Commission on 2014. (Law Commission, 2014)

The launched reform provides a new era for marine insurance warranties law in the UK but in practice it also is determined by how insurers draft their conditions in the contracts of marine insurance.

The UK Law Commission revealed that in the consultation process about insurance warranties 88% of respondents related to the industry agreed that there was a goal to reform the legislation (in relation to areas 33 and 34 of the Marine Insurance Action 1906).

These old rules balanced the relation in favor of the insurance provider and categorized promissory warranty specifics as drastic requirements which must be exactly complied with. When the infringement of warrantee occurs the insurance policy is no longer valid and the insurer is discharged from liability and there is no solution for this, unless the insurer waives the breach. The warrantee does not have to be material to the risk. Therefore the insurance provider is not obliged to cover a loss when a breach of any warrantee has occurred.

The old concept in warranties was also extended to what is understood as most basic of the contract. Consequently any failed statement from the insured before the execution of the deal of insurance which is to be considered as basis of the deal exonerated the insurer from liability in event of any loss even when the breach is not material to said damage.