Reforming the English Law on Insurable Interest

Introduction:



The law on insurance in the UK has not been updated for quite long and the call for reform is catching pace by every passing day. The issues to be raised in this research are the areas where reform is needed, the reason there is this need and what would be achieved by the reform. This research will however be confined to one major area where reform is required, namely, the insurable interest. This area might seem to be minimal but there are many issues within this area which needs to be clarified and reformed. This area affects the daily lives of a common person in the UK and it has been the courts and to some extent the insurers themselves who are giving them remedies. This area is in need of serious legislative change to transform the way people are involved with insurance companies. There will be some recommendations on how to bring about a change and how will that change affect the lives of people in the UK. In recommending the changes, some ideas will also be taken from foreign jurisdictions who have already transformed their respective laws. The drawbacks, if any, in the transformed system of the foreign jurisdictions will be identified and will be of great assistance in formulating a system which will be without those errors and therefore, getting a better idea from their experiment with the changes in law.



Historical Background:



The requirement that an assured must have insurable interest in the subject matter of a policy is very fundamental one which goes to the heart of the insurance policy and is based on the principles of indemnity . If the assured possess the insurable interest in the subject matter than only can the insurer perform his duty by indemnifying the assured against losses .   In case there is no insurable interest in the subject matter, the insurer will have a good defence to refuse payment against the losses .   Another reason for the requirement of insurable interest is to...