Postings revisited

Earlier postings revisited

One of the LMI team, Max Salveson wrote to me in relation to two of my recent blogs suggesting some advice in addition to that which I provided and I share them with you in view of their importance.

On the issue of Theft of Metals (5th February 2012)

This one suggests to me that there is a need to leave a further message as “Practice notes for brokers”

Brokers need to be very aware of this problem and make certain that the property coverage they arrange adequately caters for theft of parts of the building, building services and fixed plant in the openair”

The second comment was in respect of the article where the 9 months Indemnity Period chosen by the broker ran out. (12th February 2012)

Allan, It appears that the issue in the machinery claim arose due to the delay by the underwriter’s engineer in accepting liability and approving the method of settlement. Surely that delay arises from the insurer’s failure to honour the contract in a timely fashion and for the purposes of equity require the insurer to extend the indemnity period accordingly?

I agree wholeheartedly with both comments. With regard to the second, regretably while most insurers do act with Utmost Good Faith with their clients appreciating that as was articulated by Lord Justice Mansfield in Carter v Boehm (1766) 3 Burr 1905

“Good faith forbids either party, by concealing what he privately knows, to draw the other into a bargain from his ignorance of that fact, and his believing the contrary.”

Due to the actions of a few Insurers some countries like Australia have introduced legislation such as the Insurance Contracts Act (1984). Even then some say that this has not gone far enough and that insurance should be subjected to the same rules in respect of unconscionable behaviour as other industries.  Part of me would be disappointed to see this be introduced into our industry particularly when it was affirmed that an Insured could seek damages for breach of contract as with any other commercial contract in Brescia Furniture Pty Limited v QBE Insurance (Australia) Limited & anor [2007] NSWSC 598. Having said this, there are some cowboys out there as there are in all industries and I can see why some believe it is necessary.

The particular claim that I was asked to comment on originated out of India which does not have the protection of an Australian style Insurance Contracts Act. Here whether the Insurer has breached the principle of Utmost Good Faith will need to be considered under Indian common law.

Thanks for your valuable input Max. I have passed it on to the reader with some added advice.

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