The time has come to embrace reform – not just for the benefit of policyholders and insurers, but for the future of Australia’s maritime industry as a whole.
The Marine Insurance Act 1909 (Cth) (AMIA) has governed Australia’s marine insurance law for over a century. However, as the global maritime industry evolves, there have been repeated calls for reform. The AMIA’s framework for promissory warranties (which help protect the risk an insured agrees to accept from alteration during the policy period) is of particular concern, and has been seen to no longer align with modern insurance practice or with other marine jurisdictions such as the United Kingdom and New Zealand.
To promote open discussion on this important issue, Liberty Specialty Markets and Kennedys have partnered to co-author the whitepaper: Marine insurance warranties under Australian law: Lost at sea? The paper provides a comprehensive overview of the role, historic purpose and current issues arising from the framework for promissory warranties established by the ageing AMIA, as well as a review of recent case examples from common law courts.
A key criticism of the AMIA’s warranty regime is the unforgiving remedy that applies for breach of warranty where there is a subsequent claim, even if the breach was not causally relevant. That remedy framework has seen some courts resolve warranty disputes in ways that can be difficult to reconcile with the Act itself and which are productive of uncertainty. Such uncertainty, both legally and commercially, could well hinder Australia’s role as a market for placing marine insurance. At the same time, underwriters are understandably losing confidence in the use of warranties for their original purpose.
Liberty has been involved in significant losses where compliance with marine warranty provisors has been a key issue. We have seen first-hand the shortcomings that flow from Australia's outdated legislative framework. By comprehensively analysing the need for reform, and by making specific recommendations, we hope to support more certainty for everyone involved in marine insurance and help preserve Australia as an attractive jurisdiction in which to transact and insure marine business.
- Nathan McLellan, Liberty Specialty Markets
The paper offers cautious guidance to those who draft and negotiate warranties under Australia's current legislation, in addition to careful examination of various options for much needed reform. The approaches taken in the United Kingdom and New Zealand are examined, as is the treatment of remedies under Australia’s Insurance Contracts Act 1984 (Cth) (ICA).
This paper will interest marine insurers, insureds, brokers and lawyers. It will also benefit and help to guide those who want to better understand the need and options for reform.
You can view the full paper at the link below. If you would like to discuss any of the information provided please contact us.
Published by
Nathan McLellan Vice President, First Party Claims - Asia Pacific
