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PROPORTIONALITY, FAIR PRESENTATION OF THE RISK AND THE HYPOTHETICAL BARGAIN: THE LAW COMMISSION’S REMAKING OF COMMERCIAL INSURANCE LAW
The Law Commission has a growing role in the design of English private law, with its ability to fast-track Bills through Parliament. This makes its vision for consumer and commercial markets of considerable significance. This article considers the recent use of these powers in creating a series of proportionate remedies for breach of pre-contractual duties in insurance contract law. The Insurance Act 2015, which provides the case study for this piece, requires the judiciary to imagine the bargain that the parties would have made, were it not for the breach. This requires the sophisticated issue of counterfactual analysis, a technique often used but poorly understood within much of private law theory. The 2015 Act provides a timely case study for lawmakers in general on the risks of trying to do too much with too little information.
“ He that can set hypothetical possibility against acknowledged certainty, is not to be admitted among reasonable beings. ” †
I. PROPORTIONAL REMEDIES AND THE CONTRACTUAL PERFORMANCE THAT NEVER WAS
Proportionality is the objective standard of our age, with growing dominance across private law, public law and hybrid systems. It is an important signifier of modern regulatory
* Professor of Insurance & Commercial Law, University of Southampton. The author is grateful to Dr Katie Richards, Cardiff University, and Professor David Campbell, Lancaster University, for helpful comments on an early draft. The anonymous reviewer was also of considerable assistance in developing the flow of the analysis. The usual caveat applies.
† Dr Samuel Johnson, Rasselas, Prince of Abissinia (1759), Ch.XLVIII: “Imlac Discourses on the Nature of the Soul”, 185; archived at http://www.gutenberg.org/files/652/652-h/652-h.htm. Dr Johnson's title was granted as an honorary Doctorate of Laws (LLD) awarded by University College Dublin.
The following abbreviations are used:
CIDRA 2012: Consumer Insurance (Disclosure and Representations) Act 2012;
FOS: Financial Ombudsman Service;
IA 2015: Insurance Act 2015;
MA 1967: Misrepresentation Act 1967;
MIA 1906: Marine Insurance Act 1906.
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