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Insurance Act 2015 MASTER OF SCIENCE IN MARITIME SCIENCE MASTER DISSERTATION Academic year 2015 – 2016 Insurance Act 2015 Student: Annelies De Boever Submitted in partial fulfillment of the Supervisor: Prof. Dr. Kristiaan Bernauw requirements for the degree of: Master of Science in Maritime Science Assessor: Patrick Allary Acknowledgements The dissertation you’re about to read has a special meaning to me. It is the end of a seven-year period that contained many moments of hard work but also brought a lot of joy. It is the beginning of a new chapter in my life and new challenges entering the business world and the working life. I can most sincerely say, that the past year, was the most interesting and inspiring year of my academic studies. Applying for the inter-university master programme of Maritime Sciences was one of the best decisions I have ever made. Not only have I learned about the legal aspects of the dynamic maritime business world, I also went out of my comfort zone to discover more economical and technical aspects, which were more interesting than I had ever imagined. Next to this, I loved the ‘family feeling’ of this master programme. I have met new people, made a lot of new friends and for the first time had a real connection with professors and assistants. I would advise every person interested in the maritime world, to follow this programme. I also want to thank some persons that helped, supported and inspired me during this year. First of all I would like to thank my promotor professor Kristiaan Bernauw for his guidance with regards to this dissertation. I want to thank all the other professors and assistants for sharing their knowledge with me during the programme and helping me to grow mine. I also want to thank my parents for giving me this opportunity and for their great support and encouragement throughout my entire academic career. At last I want to thank my brother Gertjan and my friend Michiel, who encouraged me to exceed my own limits. i List of Abbreviations BIBA British Insurance Brokers’ Association CIDRA Consumer Insurance (Disclosure and Representations) Act 2012 EA Enterprise Act IA Insurance Act IUA International Underwriters Association LMA Lloyds’s Market Association MIA Marine Insurance Act iii Table of Contents Acknowledgements ............................................................................................................................. i List of Abbreviations ........................................................................................................................ iii Table of Contents ............................................................................................................................... v Introduction ...................................................................................................................................... 1 Part 1 Marine Insurance ................................................................................................................... 3 Chapter 1 Definition of marine insurance .............................................................................. 5 Chapter 2 The nature of marine insurance ............................................................................ 7 2.1 Contract of indemnity ............................................................................................ 7 2.2 Losses caused during marine adventure ................................................................ 8 2.3 Sea and land risks .................................................................................................. 8 2.4 Insured object ........................................................................................................ 8 2.4.1 Ship .......................................................................................................................................... 9 2.4.2 Freight ..................................................................................................................................... 9 2.4.3 Goods .................................................................................................................................... 10 Chapter 3 Fundamental Principles ........................................................................................ 11 3.1 The insurable interest .......................................................................................... 11 3.2 Good faith ............................................................................................................ 12 3.3 Non-disclosure ..................................................................................................... 12 3.4 Misrepresentation ................................................................................................ 12 3.5 Warranties ........................................................................................................... 13 Chapter 4 The history of marine insurance legislation .......................................................... 15 4.1 From the Rhodians and Romans till the MIA of 1906 ........................................ 15 v 4.2 The Marine Insurance Act of 1906 ...................................................................... 16 4.3 The Insurance Act of 2015 ................................................................................... 17 Part 2 Marine Insurance Act Reform .............................................................................................. 21 Chapter 5 Non-disclosure and misrepresentations ................................................................ 23 5.1 Explanation of the concept .................................................................................. 23 5.2 Current legislation ............................................................................................... 24 5.2.1 Section 17 MIA 1906 ............................................................................................................. 24 5.2.2 Section 18 MIA 1906 ............................................................................................................. 24 5.2.3 Section 18 (3) MIA 1906 ....................................................................................................... 27 5.2.4 Section 19 MIA 1906 ............................................................................................................. 29 5.2.5 Section 20 MIA 1906 ............................................................................................................. 30 5.2.6 Conclusion ............................................................................................................................. 31 5.3 Reform under IA 2015 ......................................................................................... 31 5.3.1 The change of the concept...................................................................................................... 32 5.3.2 The introduction of a second limb in the duty of disclosure. ................................................. 32 5.3.3 The disclosure must be in a manner which would be reasonably clear and accessible to a prudent insurer ..................................................................................................................... 33 5.3.4 The disclosing of information forming the subject of a warranty .......................................... 34 5.3.5 The reasonable search regarding the knowledge of the insurer and the insured. ................... 34 5.3.6 How to prepare on these changes? ......................................................................................... 38 5.3.7 Conclusion ............................................................................................................................. 39 Chapter 6 Remedies for non-disclosure ................................................................................. 43 6.1 Explaining the concept ........................................................................................ 43 6.2 Current legislation ............................................................................................... 43 6.3 Future changes under IA 2015 ............................................................................ 44 6.3.1 Deliberate or reckless breach ................................................................................................. 45 6.3.2 Non deliberate or reckless qualifying breaches...................................................................... 46 6.3.3 How to prepare on these changes? ......................................................................................... 48 6.3.4 Conclusion ............................................................................................................................. 49 Chapter 7 Warranties and other terms .................................................................................. 51 7.1 Current legislation ............................................................................................... 53 7.1.1 Explaining the concept of warranty ....................................................................................... 53 7.1.2 Expressed and implied warranties .......................................................................................... 53 7.1.3 Identification of a warranty .................................................................................................... 54 7.1.4 The compliance rule and the consequence of its breach ........................................................ 55 7.1.5 Breach of
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