The duty of utmost good faith and the London commercial insurance market practice

This thesis explores the application of the duty of utmost good faith to current London commercial insurance market practices with the assumption that commercial market practices do not make it simple for the duty of utmost good faith to apply. The scope of the duty of utmost good faith in this thesis is the pre-contractual duty as the study of the corpus of the duty of utmost good faith illustrates that the post-contractual duty of utmost good faith introduced by recent common cases is of limited significance. The thesis examines how this pre-contractual duty accommodates the London commercial insurance market and how the common law judges solve the problems arising from the way the market practices, in particular, where the slip is used at the placing process; where declaration policies e.g. open cover, treaty, binding authority or line slip are used to facilitate insurance business; where there is more than one agent involved in effecting an insurance contract; where the duty of utmost good faith has been waived and; where the insurance contract is effected through electronic insurance. It can be obviously seen from this research that the solutions suggested by the common law judges are merely immediate solutions and cannot solve the situation where the slip is used at the placing process. They do not provide a long term solution to the overall problems. The result of this research is that market self-regulation, the London Market Principles 2001, which overhaul the market infrastructure and introduce the concept of ‘clarity and certainty’ of contract from the outset, can provide a long term solution to the problems.