Page 33 - The Insurance Times August 2025

The revised legislations heralded a new era for marine or a loss at a particular time or in a particular place,
insurance warranties law in the UK with significant changes which is demonstrated to have not potentially increased
being affected. the risk of an occurred loss, does not exonerate the
insurer's liability. Therefore, the insurer is not able to
To give a background for these revisions in UK, it needs to rely on any defense which is not material to the loss
be said that it was felt that the provisions on warranties with the exception that this is not to be applied for
embodied in the English Marine Insurance Act 1906 had terms that define the risk as a whole. As an example if
become obsolete. In fact, the UK Law Commission revealed the warranty states that the vessel should have fire
that in the consultation process about insurance warranties alarms and the vessel sinks because of any reason not
88% of respondents related to the industry agreed that related to fire then the insurer is not able to refuse
there was a need to reform the law in relation to sections payment of the indemnity.
33 and 34 of the Marine Insurance Act 1906. The Law
Commission in its report highlighted the general view that Now going back to the Supreme Court judgment in the Hind
the UK was out of sync with the global market practices. Offshore vs. Iffco Tokio case, it is stated therein that, "From
a perusal of the provisions as contained in the Marine
Changes in the provisions related to Insurance Act 1963 relating to warranties, if the
requirement is not complied with, then the insurer is
warranties in UK Insurance Act, 2015 discharged from liability as from the date of breach of
The significant changes in the provisions related to warranty but without prejudice to any liability incurred
warranties were elucidated by Prof (Dr) Abhijit K.Chattoraj before that date."
in his article but to refresh our memories the same can be
summarized as follows: It is pertinent to note that the provisions referred in the
judgment above.i.e. -Sec 35(3) of the Marine Insurance Act,
a) The old strict compliance principle in marine insurance
warranties has been fundamentally changed. Under the 1963, (which corresponds to the same provisions in Sec 33(3)
of the UK Marine Insurance Act, 1906) have been deleted
new Act, the result of a breach of warranty is the
in UK with the enactment of the new Insurance Act, 2015.
suspension of liability of the insurer under the contract
of insurance and not an automatic discharge. Since the new UK Insurance Act changes were effective
from 16.08.2016 they will have no direct bearing on this
Therefore, insurers are not obliged to pay for a loss
claim which occurred on 3rd December, 2006 However, it
occurring during the period when the suspension was would be interesting to conjecture on the possible outcome
in force, but if a loss occurs subsequent to the remedy
of a dispute involving a claim arising from an accident
of the breach then liability of the insurer is not affected. occurring after the UK Act amendment, under similar
For instance, regarding a warranty that there should circumstances.
be 5 watchmen at all times, there will be no cover while
the vessel breaches the warranty on the number of Changes in the provisions related to the
watchmen but the cover will be reinstated as soon as duty of disclosure in UK Insurance Act,
the breach is corrected.
2015
b) "Basis of the contract" clauses in insurance contracts
have been abolished. These clauses effectively turned There are also very important changes brought about in the
the contents of a proposal into a warranty and meant new Act on the aspect of the duty of disclosure .The duty of
disclosure is one of the most important aspects of insurance
that an insurer could avoid a claim based on the fact
that one of the statements of the proposal form, even law based on the principle of utmost good faith with its
roots traceable to the 18th century when Lord Mansfield
on a trivial or immaterial issue, was inaccurate. Under
stated that "good faith forbids either party, by concealing
the new Act any representation made by the insured is what he privately knows, to draw the other into a bargain
not liable to be considered as warranty unless they are
from his ignorance of that fact, and from his believing to
expressly mentioned in the contract of insurance.
the contrary".
c) Finally, the causation rule is adopted for marine
insurance warranties. The non-compliance with a term In the UK Marine Insurance Act, 1906, in Section 18
designed to reduce the risk of a particular type of loss, (corresponding to Sec 20 of the Indian Marine Insurance Act,

30 August 2025 The Insurance Times