This Chapter deals with the effects of a breach by the person effecting the insurance or the assured of the duties imposed on them by the contract relation. These matters are also subject to detailed regulation in the relevant Nordic Insurance Contracts Acts (Nordic ICAs). The provisions of the Nordic ICAs have been amended substantially in relation to the previous Norwegian ICA dating from 1930, which formed the basis for the 1964 Plan. The amendments concern the criteria for the threshold for invoking/triggering sanctions and the criteria for the type of sanctions triggered/invoked. Generally it can be said that the amendments give greater protection to the person effecting the insurance and the assured in the event of breach of the duty of disclosure or the duty of care. The most important change is probably the one concerning the type of sanction, entailing a change from no liability at all to rules for discretionary reductions in a variety of situations.
The statutory provisions are not, however, mandatory for ships subject to registration which are used in commerce, cf. the relevant Nordic ICAs. One is, therefore, free to choose whether the Plan should be adapted to follow the provisions of the Nordic ICAs or not.
In principle, the approach during the revision has been that the Plan should follow the provisions of the relevant Nordic ICAs as far as possible. This is, however, not very satisfactory as regards the duty of disclosure and the duty of care. Even though they apply generally, the Nordic ICAs’ provisions are aimed primarily at protecting consumers. In marine insurance, on the other hand, the person effecting the insurance is often a business enterprise; additionally, Norwegian shipowners have traditionally possessed considerable expertise in insurance matters. There is therefore not the same need for the type of extensive protection aimed at by the Nordic ICAs. Nor is the sanction structure in the Nordic ICAs, with its considerable emphasis on discretionary decision-making, entirely appropriate for a field like marine insurance. Given the considerable sums involved in marine insurance, allowing discretion to play such a large part could easily lead to significant growth in the number of lawsuits.
Although it was natural, as a starting proposition, to continue the approach of the 1964 Plan and the changes introduced by the conditions since then, there has been a need to achieve better co-ordination of the sanctions in the rules in this Chapter. Under the 1964 Plan, for example, the nature of the sanction to be applied depended upon which of the rules in Chapter 3 the fault of the shipowner could be categorised under. These differences have not always appeared to be well-founded. It has not, however, been possible to co-ordinate the sanctions completely. If an act of negligence by the assured can be subsumed under several provisions of the Plan at the same time, and the sanctions are different, the insurer will, in principle, be free to invoke the rule which gives him the most favourable result.
Cefor - The Nordic Association of Marine InsurersP.O. Box 2550 Solli, NO-0202 Oslo, Norway, +47 23 08 65 50 firstname.lastname@example.org