3.1 Introduction

It has long been established that in insurance law the duty of good faith is reciprocal2 and the insurer is expected to act in good faith in his dealings with the assured in the same fashion as the assured is expected to observe good faith towards the insurer. The insurer’s duty of good faith has been traditionally traced to s. 17 of the Marine Insurance Act (MIA) 19063 which stipulates in a general manner that: “A contract of marine insurance is a contract based upon the utmost good faith, and, if the utmost good faith be not observed by either party, the contract may be avoided by the other party.”