What´s It To You? Insurable Interest: The Law Commissions´ Proposal

Having scrutinised the doctrine of "insurable interest" the Commissions ask indemnity insurers whether there is, in fact, any continued need for this doctrine.

Curiously, what links the origins and now the proposed abandonment of the doctrine in England is gambling. The statutory requirement for an "insurable interest" was introduced in the eighteenth century to deter wagering and protect against moral hazard (the incentive to destroy the insured property or taking of an insured life).

Since the Gambling Act 2005 came into effect on 1 September 2007, many indemnity insurance contracts may now be valid despite a lack of insurable interest. However, this does not mean that the holders of such policies will be able to recover under them. Many of the abuses against which the requirement for an insurable interest protected are, in fact, satisfactorily catered for by the common law "indemnity principle".