Was 2019 a big year for the Insurance Act 2015?

On 22 March 2018, a fire took place at commercial premises in Glasgow owned by Mr Young and his company, Kaim Park Investments Ltd (Kaim). Boyds brokers had arranged their insurance with Royal & Sun Alliance (RSA) via a ‘Market Presentation’ using their own software. The Market Presentation identified Mr Young and Kaim as the clients. The ‘Details’ section of the presentation contained a passage referred to by the Court as a Moral Hazard Declaration. The Declaration stated:

“Select any of the following that apply to any proposer, director or partner of the Trade or Business or its Subsidiary Companies if they have ever, either personally or in any business capacity: …”

The Declaration contained a drop-down menu requiring boxes to be ticked by the insured against any true statement. One of the statements was: “no proposer, director or partner of the insured under the contract in question has ever been made bankrupt, insolvent, or subjected to such proceedings”. The box relating to this statement was left unticked. In fact, the word “none” had been written in respect of all of the statements in the drop-down menu and it was unclear to which statement this word referred.

The Market Presentation was followed by an email on 24 March 2017 from RSA attaching RSA’s terms and premium, with a subjectivity that stated “Insured has never … Been declared bankrupt or insolvent … [or] Had a liquidator appointed”. The brokers responded that the email was correct.

It later transpired that Mr Young had been the director of four companies that had been dissolved after insolvent liquidation or placed into insolvent liquidation in the prior five years. This was the ‘undisclosed information’.

RSA, therefore, sought to avoid the policy for material non-disclosure. Mr Young claimed that RSA had waived disclosure of the undisclosed information pursuant to Section 3(5)(e) of the Insurance Act 2015. Mr. Young focused upon the reference to the “Insured” in the 24 March 2017 email to suggest that RSA had waived entitlement to disclosure in respect of anyone other than the insureds (Mr Young and Kaim) themselves.

Section 3(1) Insurance Act 2015 sets out the basic duty of fair presentation of the risk (effectively replacing the duties in Section 18, 19 and 20 Marine Insurance Act 1906):

“(1) Before a contract of insurance is entered into, the insured must make to the insurer a fair presentation of the risk.”

Section 3(3) sets out three elements of a fair presentation of the risk, of which section 3(3)(a) was relevant in this case:

“(3) A fair presentation of the risk is one-
     (a) Which makes the disclosure required by subsection (4),”

Section 3(4) provides (effectively replacing Section 18(1) Marine Insurance Act 1906):

“(4) The disclosure required is as follows, except as provided in subsection (5)-
     (a) Disclosure of every material circumstance which the insured knows or ought to know,”

The relevant exception in Section 3(5) states (effectively replacing Section 18(3)(c) Marine Insurance Act 1906):

“(5) In the absence of enquiry, subsection (4) does not require the insured to disclose a circumstance if-
      …
     (e) it is something as to which the insurer waives information.”