Page 23 - The Insurance Times March 2025

Demystifying Insurance

Unlocking the

Implication of

Warranty

Prof (Dr) Abhijit K. Chattoraj
Chartered Insurer - Professor of
Insurance &Risk Management and
Director - MDP & Consulting;
IMS Unison University.

It is heartening to note that the regulator in India (IRDAI) recently formed a high-power panel to
suggest measures for insurance reforms. It is expected to examine various areas of the Insurance
Act 1938 and recommend suitable and adequate amendments in keeping with the changing
business trends and requirements of the customers.

I t is heartening to note that the regulator in India The changes made in these two acts and the Marine Act

(IRDAI) recently formed a high-power panel to sug-
1906 somehow weren't incorporated in India's Insurance
gest measures for insurance reforms. It is expected
Laws( Amendment Act) 2015.
to examine various areas of the Insurance Act 1938
and recommend suitable and adequate amendments in Section 33(1 ) of the Marine Insurance Act 1906 states that
keeping with the changing business trends and requirements 'A warranty, means a promissory warranty, that is to say, a
of the customers. Modernising the Insurance Act is urgently warranty by which the assured undertakes that some par-
needed to suit the changing business dynamics. Insurance ticular thing shall or shall not be done, or that some condi-
Act 2015(UK) initiated many changes that suit the require- tion shall be fulfilled, or whereby he affirms or negatives the
ments of customers and business entities. In this article, an existence of a particular state of facts'. Section 33(2) states
effort has been made to understand the implication of 'War- that A warranty may be express or implied. Section 33(3)
ranty' and its evolution over the period.
states, "A warranty is a condition which must be exactly
complied with, whether it be material to the risk or not. If
It is pertinent to mention that two insurance laws that work
it is not complied with, then, subject to any express provi-
in the UK: 1. Consumer Insurance (Disclosure and Represen-
sion in the policy, the insurer is discharged from liability as
tations) Act 2012 deals with consumer insurance contracts
where an individual enters into the contract wholly or mainly from the date of the breach of warranty, but without preju-
for purposes unrelated to the individual's trade, business or dice to any liability incurred by him before that date'. Sec-
profession. The word consumer means an individual enter- tion 34(2) provides that once a warranty has been broken,
ing a consumer insurance contract or proposing to do so; 2. the insured cannot use the defence that the breach has
Insurance Act 2015 applies to non-consumer insurance. It been remedied.
defines a non-consumer insurance contract as a contract of
insurance that is not a consumer insurance contract. Non-compliance with a warranty, however, is exempted only

The Insurance Times March 2025 21