THE LAW OF INSURANCE
THE INSTITUTE OF FINANCE MANAGEMENT
COURSE OUTLINE
LAW OF INSURANCE
(For Undergraduate students)
Course aims
The primary purpose of the full unit course is to enable students to develop detailed knowledge of the techniques and legal context of the law governing insurance. No previous knowledge of the law is required; however acquired knowledge on contract law may be important to certain aspects. The outline is mainly based on various pieces of legislation, and common law doctrines. Instruction is predominantly by way of lectures and seminars and the class is expected to be interactive.
Course Objectives
A participant who successfully completed this unit should:
a. Have a sound knowledge of the principles of insurance law
b. Know the nature of the insurance contract
c. Differentiate insurance contract from other types of contract.
d. Have the knowledge and understanding of the system within which these laws operate
e. Be able to apply knowledge and skills to simple situations
f. Appreciate the diverse branches of the law that make up the totality of the insurance law in Tanzania.
Applicable statutes
Motor vehicle Insurance Act, cap.169
The Transport Licensing Act, 1973
The Road Traffic Act, 1973
Carriage of Goods by Sea Act, Cap.164
Workmen’s Compensation Act.
The Stamp Duty Act, 1972
The Law of Contract Act, 1961
Banking and Financial Institutions Act, 2006
The Insurance Act, 1996
The Bank of Tanzania Act, 2006
The Judicature and Application of Laws Act, 1961
The Fatal Accidents (Miscellaneous amendments) Act
The Law of Limitations Act, 1971
The Bankruptcy Act
Module Contents
1. The nature and scope of the contract of Insurance
1.1. General
(a) What is a Contract of Insurance
(b) Categories of contracts of Insurance
(c) Objectives and functions of insurance
1.2. The nature and characteristics of the contract of Insurance
(a) The nature of insurance contract
(b) Insurance contract vis-a-vis other types of contract
(c) General principles of insurance
(i) The Principle of Good faith
(ii) The Principle of Indemnity
(iii) The Principle of subrogation
(iv) The Principle of contribution
1.3. How the general principles of contract apply in insurance (in brief)
2. Formation of the contract of Insurance
2.1. Pre-contractual requirement: Duty of disclosure, warranties and misrepresentation; remedies for breach
2.2. Parties to the policy of insurance- the assured and the insurer
2.3. Offer and acceptance in the policy of insurance and their effects
2.4. Consideration in Insurance contract
2.5. Capacity of parties (who may insure and who may not)
2.6. Intention to create legal relation i.e. cover note, slip and deposit slip.
2.7. Nature and scope of risk covered
(a) The extent of risk and ordinary limitation
-really a matter of construction i.e. “contra preferentum rule”
-consideration of the terms such as “accident”, “all risks”, “damage by fire”, “loss and consequential loss”, natural causes etc
Dhak v. Insurance Co of North America (UK) Ltd [1996] 1WLR 936
Gray v. Barr [1971] 2 QB 554 (CA)
(b) Period covered
(c) Exceptions and exemption clauses
2.8. Conditions in the Policy
2.9. Assignment in Insurance business
3. Rights and Duties of the Parties
3.1. Rights of the Insured
3.2. Duty of the Insured to disclose (Uberrimae fidei)
3.3. Rights of the Insurer
a. Salvage
b. Subrogation
c. Contribution
3.4. Duties and liabilities
4. Void and Illegal Insurance contracts (legal and illegal insurance)
4.1. Void, voidable and illegal contracts
4.2. What is wager and wagering contracts
4.3. Legality of wagering contracts
5. The Principles of Insurance law
5.1. The Principle of Indemnity
(a) Meaning of indemnity
(b) Measure of indemnity
(c) Economic rationale of indemnity
(d) Double insurance
5.2. Reinstatement
(a) Meaning of reinstatement
(b) Application of reinstatement
(c) Statutory reinstatement
5.3. Subrogation
(a) What is subrogation
(b) Application of the doctrine
(c) Limitation of subrogation
(d) The extent of subrogation’s right
(e) The effect of subrogation
5.4. Insurable interest
(a) What is insurable interest
(b) The nature of insurable interest in property and lives
(c) The functions of insurable interest
6. Intermediaries in Insurance
6.1. Agents in Insurance Law
· Who is an agent
· Types of insurance agents
· Creation of agency
· Relationship between a principal and agent in insurance contract
· Relationship between principal and third parties
· Agent’s right and responsibilities
· Agent’s authorities and duties
· Duties of the agent vis a vis third parties
· Insurer’s liability to third parties
· Termination of the agency relationship
· Remedies for the breach of contract of agency in insurance
6.2. Brokers
7. Reinsurance
7.1. Definition
7.2. Rationale for reinsurance
7.3. Mandatory reinsurance
8. Insurance claims and claims settlement
8.1. Procedure of claims notice and proof of loss
8.2. The doctrine of proximate cause (proximate causa)
8.3. Continuity duty of good faith
8.4. Affirmation and waiver
8.5. Basis and application of contribution
8.6. Fraudulent claims
9. Liability in tort
9.1. Meaning of tort
9.2. Basis of tort in insurance
9.3. Main torts related to insurance matters
9.4. Basis of liability
(a) Occupiers liability
(b) Vicarious liability
(c) Negligence and contributory negligence
(d) Battery
9.5. Defences
9.6. Limitation of actions
· The limitations of actions in tort
· Relevant periods applicable in contracts and tort
9.7. Classification of damages and recoverable damages in tort
9.8. Remedies in tort
10. Insurance regulations
10.1. Who is the regulator
10.2. The need for insurance control and supervision
10.3. Types of regulation: advantage and disadvantages
10.4. Functions of the National Insurance Board
10.5. Insurer to be a body corporate
10.6. Capital requirement and its implications
10.7. Margin of solvency
10.8. Registration requirement of insurers.
10.9. Restriction of certain people in business s.18
10.10. Cancellation of registration
10.11. Records to be in English and Kiswahili
10.12. Insurer code of practice
10.13. Conditions for underwriters association
10.14. Third party rights against insurers
10.15. Registration of Insurers, brokers, insurance agents, and agents for brokers.
10.16. Agents to act for one principal only
10.17. Insurer’s and broker’s responsibilities for agents
10.18. Registration requirements of insurance brokers
10.19. Broker’s capital requirements
10.20. Mandatory reinsurance
10.21. Commissioner’s right of inspection of documents
10.22. Restrictions on the use of words
11. Compulsory Insurance
11.1. Motor vehicle insurance
(a) Statutory requirement
(b) Penal consequences
(c) Rights of third parties
(d) Clauses restricting cover
(e) Third party liability
(f) Comprehensive policies.
11.2. Statutory life insurance fund
Recommended readings
Books.
Ayling, D.E., Underwriting Decisions under Uncertainty: The Catastrophe Market, Gower, 1984.
Birds, J. & N.J. Hird. Birds' modern insurance law (7th ed., London: Sweet & Maxwell, 2007). ISBN: 978-0-421- 96050-3
Clarke, M., Policies and Perceptions of Insurance, OUP Clarendon Law Series
Carman, K., Motor Insurance, Theory and Practice, Witherby and Co.Ltd, London, 1979
Carto, R.l., Reinsurance, Kluwer Law Publishing, London, 1979
Carole Murray, et al., Schmitthoff’s Export Trade, The Law and Practice of International Trade, 11th edition, Sweet and Maxwell, 2007
Cockerel, L and Shaw, G., Insurance Broking and Agency, The Law and Practice, Witherby and Co.Ltd, London, 1979
Hodgin, R., Insurance law: text and materials, 2nd ed. London: Cavendish, 2002
Markesinis, B.S. & R.J.C. Munday. An outline of the law of agency (4th ed., London: Butterworth, 1998). ISBN: 978-0-406-90412-6.
McGillivray on insurance law: relating to all risks other than marine. 10th ed. London: Sweet & Maxwell, 2003
McGee, A., The modern law of insurance, London: Butterworths, 2001
Clarke, A.M., The law of insurance contracts, 4th ed. London: LLP, 2002
Mwakajinga, J, Business Law, Volume 1, Banyakajinga Elimu Establishments, Dar es salaam, Tanzania,2005
Parsons, C., Legal Aspects of Insurance, Chartered Insurance Institute, Chapter 4-12
Smith, T.R, and Francis, H.W., Fire Insurance, Theory and Practice, 6th edition, Stone and Cox, London, 1975
Sealy, L.S. and Hooley, R.J.A., Commercial Law: Texts, Cases and Materials, 3rd Edition, Oxford University Press, 2005.
Websites
www.cii.co.uk
www.google.co.uk
www.thejuristicnews.blogspot.com
www.parliament.go.tz
www.hmso.gov.uk or www.opsi.gov.uk
www.bailii.com for cases on insurance.
Cases
Macaura v. Northern Assurance Co.[1925] AC 619 (HL)
Glicksman v. Lancanshire& General Assurance Co.Ltd [1927] AC 139(HL)
Woolcott v. Sun Alliance and London Insurance Ltd [1978] 1WLR 493 (QBD)
Economies v. Commercial Union Insurance PLC[1998] QB 587(CA)
Dawsons Ltd v. Bonnin [1922] AC 413(HL)
Houghton v Trafalgar Insurance Co.Ltd [1954] 1 QB 247
Conn v Westminster Motor Insurance Association Ltd [1966] 1 Lloyds Rep.407( condition and warranties)
Farr v.Motor Trade’a Mutual Insurance Society [1920] 3KB 669(condition and warranties)
Castellain v Preston (1883) 11 QBD 380
Republic v. Mohammed Abdallah and Another [1987] TLR 62
Republic v. Sebastian Ndomba [1986] TLR 190
Naushad M.H.Virji v. Tanzania International F.S.Ltd and another [1982] TLR 154
(the case is on vicarious liability and damages)
Machame K.C.Ltd v. Aikael Mbowe [1984] TLR 70 (Vicarious liability)
M/s Southern Highlands v. M/s Tanzania Oxygen Ltd [1989] TLR 187(agency)
COURSE OUTLINE
LAW OF INSURANCE
(For Undergraduate students)
Course aims
The primary purpose of the full unit course is to enable students to develop detailed knowledge of the techniques and legal context of the law governing insurance. No previous knowledge of the law is required; however acquired knowledge on contract law may be important to certain aspects. The outline is mainly based on various pieces of legislation, and common law doctrines. Instruction is predominantly by way of lectures and seminars and the class is expected to be interactive.
Course Objectives
A participant who successfully completed this unit should:
a. Have a sound knowledge of the principles of insurance law
b. Know the nature of the insurance contract
c. Differentiate insurance contract from other types of contract.
d. Have the knowledge and understanding of the system within which these laws operate
e. Be able to apply knowledge and skills to simple situations
f. Appreciate the diverse branches of the law that make up the totality of the insurance law in Tanzania.
Applicable statutes
Motor vehicle Insurance Act, cap.169
The Transport Licensing Act, 1973
The Road Traffic Act, 1973
Carriage of Goods by Sea Act, Cap.164
Workmen’s Compensation Act.
The Stamp Duty Act, 1972
The Law of Contract Act, 1961
Banking and Financial Institutions Act, 2006
The Insurance Act, 1996
The Bank of Tanzania Act, 2006
The Judicature and Application of Laws Act, 1961
The Fatal Accidents (Miscellaneous amendments) Act
The Law of Limitations Act, 1971
The Bankruptcy Act
Module Contents
1. The nature and scope of the contract of Insurance
1.1. General
(a) What is a Contract of Insurance
(b) Categories of contracts of Insurance
(c) Objectives and functions of insurance
1.2. The nature and characteristics of the contract of Insurance
(a) The nature of insurance contract
(b) Insurance contract vis-a-vis other types of contract
(c) General principles of insurance
(i) The Principle of Good faith
(ii) The Principle of Indemnity
(iii) The Principle of subrogation
(iv) The Principle of contribution
1.3. How the general principles of contract apply in insurance (in brief)
2. Formation of the contract of Insurance
2.1. Pre-contractual requirement: Duty of disclosure, warranties and misrepresentation; remedies for breach
2.2. Parties to the policy of insurance- the assured and the insurer
2.3. Offer and acceptance in the policy of insurance and their effects
2.4. Consideration in Insurance contract
2.5. Capacity of parties (who may insure and who may not)
2.6. Intention to create legal relation i.e. cover note, slip and deposit slip.
2.7. Nature and scope of risk covered
(a) The extent of risk and ordinary limitation
-really a matter of construction i.e. “contra preferentum rule”
-consideration of the terms such as “accident”, “all risks”, “damage by fire”, “loss and consequential loss”, natural causes etc
Dhak v. Insurance Co of North America (UK) Ltd [1996] 1WLR 936
Gray v. Barr [1971] 2 QB 554 (CA)
(b) Period covered
(c) Exceptions and exemption clauses
2.8. Conditions in the Policy
2.9. Assignment in Insurance business
3. Rights and Duties of the Parties
3.1. Rights of the Insured
3.2. Duty of the Insured to disclose (Uberrimae fidei)
3.3. Rights of the Insurer
a. Salvage
b. Subrogation
c. Contribution
3.4. Duties and liabilities
4. Void and Illegal Insurance contracts (legal and illegal insurance)
4.1. Void, voidable and illegal contracts
4.2. What is wager and wagering contracts
4.3. Legality of wagering contracts
5. The Principles of Insurance law
5.1. The Principle of Indemnity
(a) Meaning of indemnity
(b) Measure of indemnity
(c) Economic rationale of indemnity
(d) Double insurance
5.2. Reinstatement
(a) Meaning of reinstatement
(b) Application of reinstatement
(c) Statutory reinstatement
5.3. Subrogation
(a) What is subrogation
(b) Application of the doctrine
(c) Limitation of subrogation
(d) The extent of subrogation’s right
(e) The effect of subrogation
5.4. Insurable interest
(a) What is insurable interest
(b) The nature of insurable interest in property and lives
(c) The functions of insurable interest
6. Intermediaries in Insurance
6.1. Agents in Insurance Law
· Who is an agent
· Types of insurance agents
· Creation of agency
· Relationship between a principal and agent in insurance contract
· Relationship between principal and third parties
· Agent’s right and responsibilities
· Agent’s authorities and duties
· Duties of the agent vis a vis third parties
· Insurer’s liability to third parties
· Termination of the agency relationship
· Remedies for the breach of contract of agency in insurance
6.2. Brokers
7. Reinsurance
7.1. Definition
7.2. Rationale for reinsurance
7.3. Mandatory reinsurance
8. Insurance claims and claims settlement
8.1. Procedure of claims notice and proof of loss
8.2. The doctrine of proximate cause (proximate causa)
8.3. Continuity duty of good faith
8.4. Affirmation and waiver
8.5. Basis and application of contribution
8.6. Fraudulent claims
9. Liability in tort
9.1. Meaning of tort
9.2. Basis of tort in insurance
9.3. Main torts related to insurance matters
9.4. Basis of liability
(a) Occupiers liability
(b) Vicarious liability
(c) Negligence and contributory negligence
(d) Battery
9.5. Defences
9.6. Limitation of actions
· The limitations of actions in tort
· Relevant periods applicable in contracts and tort
9.7. Classification of damages and recoverable damages in tort
9.8. Remedies in tort
10. Insurance regulations
10.1. Who is the regulator
10.2. The need for insurance control and supervision
10.3. Types of regulation: advantage and disadvantages
10.4. Functions of the National Insurance Board
10.5. Insurer to be a body corporate
10.6. Capital requirement and its implications
10.7. Margin of solvency
10.8. Registration requirement of insurers.
10.9. Restriction of certain people in business s.18
10.10. Cancellation of registration
10.11. Records to be in English and Kiswahili
10.12. Insurer code of practice
10.13. Conditions for underwriters association
10.14. Third party rights against insurers
10.15. Registration of Insurers, brokers, insurance agents, and agents for brokers.
10.16. Agents to act for one principal only
10.17. Insurer’s and broker’s responsibilities for agents
10.18. Registration requirements of insurance brokers
10.19. Broker’s capital requirements
10.20. Mandatory reinsurance
10.21. Commissioner’s right of inspection of documents
10.22. Restrictions on the use of words
11. Compulsory Insurance
11.1. Motor vehicle insurance
(a) Statutory requirement
(b) Penal consequences
(c) Rights of third parties
(d) Clauses restricting cover
(e) Third party liability
(f) Comprehensive policies.
11.2. Statutory life insurance fund
Recommended readings
Books.
Ayling, D.E., Underwriting Decisions under Uncertainty: The Catastrophe Market, Gower, 1984.
Birds, J. & N.J. Hird. Birds' modern insurance law (7th ed., London: Sweet & Maxwell, 2007). ISBN: 978-0-421- 96050-3
Clarke, M., Policies and Perceptions of Insurance, OUP Clarendon Law Series
Carman, K., Motor Insurance, Theory and Practice, Witherby and Co.Ltd, London, 1979
Carto, R.l., Reinsurance, Kluwer Law Publishing, London, 1979
Carole Murray, et al., Schmitthoff’s Export Trade, The Law and Practice of International Trade, 11th edition, Sweet and Maxwell, 2007
Cockerel, L and Shaw, G., Insurance Broking and Agency, The Law and Practice, Witherby and Co.Ltd, London, 1979
Hodgin, R., Insurance law: text and materials, 2nd ed. London: Cavendish, 2002
Markesinis, B.S. & R.J.C. Munday. An outline of the law of agency (4th ed., London: Butterworth, 1998). ISBN: 978-0-406-90412-6.
McGillivray on insurance law: relating to all risks other than marine. 10th ed. London: Sweet & Maxwell, 2003
McGee, A., The modern law of insurance, London: Butterworths, 2001
Clarke, A.M., The law of insurance contracts, 4th ed. London: LLP, 2002
Mwakajinga, J, Business Law, Volume 1, Banyakajinga Elimu Establishments, Dar es salaam, Tanzania,2005
Parsons, C., Legal Aspects of Insurance, Chartered Insurance Institute, Chapter 4-12
Smith, T.R, and Francis, H.W., Fire Insurance, Theory and Practice, 6th edition, Stone and Cox, London, 1975
Sealy, L.S. and Hooley, R.J.A., Commercial Law: Texts, Cases and Materials, 3rd Edition, Oxford University Press, 2005.
Websites
www.cii.co.uk
www.google.co.uk
www.thejuristicnews.blogspot.com
www.parliament.go.tz
www.hmso.gov.uk or www.opsi.gov.uk
www.bailii.com for cases on insurance.
Cases
Macaura v. Northern Assurance Co.[1925] AC 619 (HL)
Glicksman v. Lancanshire& General Assurance Co.Ltd [1927] AC 139(HL)
Woolcott v. Sun Alliance and London Insurance Ltd [1978] 1WLR 493 (QBD)
Economies v. Commercial Union Insurance PLC[1998] QB 587(CA)
Dawsons Ltd v. Bonnin [1922] AC 413(HL)
Houghton v Trafalgar Insurance Co.Ltd [1954] 1 QB 247
Conn v Westminster Motor Insurance Association Ltd [1966] 1 Lloyds Rep.407( condition and warranties)
Farr v.Motor Trade’a Mutual Insurance Society [1920] 3KB 669(condition and warranties)
Castellain v Preston (1883) 11 QBD 380
Republic v. Mohammed Abdallah and Another [1987] TLR 62
Republic v. Sebastian Ndomba [1986] TLR 190
Naushad M.H.Virji v. Tanzania International F.S.Ltd and another [1982] TLR 154
(the case is on vicarious liability and damages)
Machame K.C.Ltd v. Aikael Mbowe [1984] TLR 70 (Vicarious liability)
M/s Southern Highlands v. M/s Tanzania Oxygen Ltd [1989] TLR 187(agency)
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