Insurance Act 2015: Underwriters succeed on fair presentation defence
On 21 July 2026 the Court handed down its judgment in Cometsambre SA v Lloyd’s Insurance Company SA HIG 5321 [2026] EWHC 1837 (Comm) in favour of Lloyd’s Insurance Company SA HIG 5321 (the Defendant). This judgment is a rare example of underwriters successfully defending a claim for breach of the duty of fair presentation and will be a comforting case for the London market following a number of decisions in favour of insureds. From a practical perspective, it gives a real world insight into materiality under the Act.
Background
HFW acted for the successful Defendant, who instructed Timothy Hill KC and Alex Carless of 20 Essex as counsel.
The case concerned a Charterers’ Liability (C/L) policy taken out by Cometsambre (the Claimant), a Belgian scrap metal dealer. The coverholder of the C/L policy was Antwerp Insurance Claims Associates (AMICA) on behalf of the Defendant. The C/L policy had been in place through AMICA since 2008, although the dispute centred around the 2022 renewal.
In June 2022, a fire broke out on board the LOWLANDS MIMOSA while it was loading a cargo of the Claimant’s scrap metal at Ghent. This event gave rise to a substantial charterparty claim brought against the Claimant. The Claimant sought indemnification of the charterparty claim under the C/L policy.
The Defendant sought to avoid the relevant C/L policy on the basis that the Claimant breached its duty of fair presentation by failing to disclose five fires (three aboard vessels and two on the quayside) in the period between May 2020 and October 2021.
Commercial Court Judgment
The Relevant Legislation
The dispute involved the sections of the Insurance Act 2015 (IA 2015) relevant to the duty of fair presentation and whether a circumstance is material and should be disclosed. These are:
- Section 3(1) which requires the insured to make a fair presentation of the risk and section 3(4) which sets out that the insured must disclose all material circumstances it knows or ought to know.
- Section 7(3) which provides that a circumstance will be material if it would influence the prudent insurer’s judgement in deciding whether to write a risk and if so, on what terms.
- Section 3(4) (b) where disclosure will not be required where an insurer has been put on notice requiring them to make further enquiries to determine the material circumstances.
- Section (5)(3) where an insurer may be presumed to have knowledge of things which are common knowledge and which they may reasonably be expected to know based on the class and field of insurance.
- Section 3(5)(e) where an insured does not need to disclose something if the insurer has waived its right to information.
- Section 8 which provides that, for inducement, the insurer must show that it would not have entered into the insurance contract at all or would have done so only on different terms.
The Court then applied the above sections of the IA 2015 to the fact pattern as follows below, finding in favour of the Defendant that the Claimant had failed to discharge its duty of fair presentation.
Materiality
All five fires were considered to be material because they assist in establishing the overall risk profile of the Claimant, irrespective of whether a claim was made. The Court adopted the Defendant’s expert’s position that he would want to be informed of incidents capable of giving rise to a claim, and that waiting for claims to be lodged before considering whether the incident is disclosable “seriously risks prejudicing underwriters“.
The Court relied on the expert’s view that a prudent underwriter would have taken into account the five fires when deciding whether to write the risk because fires are a “…paradigm example of an incident which can give rise to liability…”. This included the quayside fires on the basis that “where a fire happens in scrap metal at the port waiting to be loaded, a prudent underwriter would see it as a fire that could just as well have happened on board the ship than on the quayside“.
The pattern of fires was also relevant to their materiality. The fact that these fires occurred across 18 months following 12 years with no fires represented a disclosable change in the Claimant’s risk profile regardless of the reason for the sudden increase. The court found this to be particularly the case in circumstances, where, as detailed further below, the cargo has been initially presented as having a low fire risk.
Knowledge of the insurer
The Claimant argued that a prudent underwriter would have known of the risk posed by the type of scrap the Claimant was shipping based on the information provided to it at initial presentation. However, the Court found that the Claimant had initially presented the cargo as clean, and a prudent underwriter would have understood the cargo to be an IMSBC Group C cargo with no special hazards.
The Court further rejected the Claimant’s contention that the cargo contained only a level of impurities that fell within the tolerances permitted under the applicable sale contract and that where cargos fall within such tolerances, fires that occur are expected. The Court instead found that tolerances agreed between a seller and buyer in a sale contract are not a reliable measure of what an underwriter would consider acceptable.
Overall, it concluded that the Defendant would have been expecting a low risk of fire, would not have known of the incidence of the fires or that the Claimant had experienced such fires in the frequency they were experienced.
Insurers on Notice
The Claimant argued that the Defendant was put on notice to make enquiries in relation to the five fires because (a) the Defendant should have been aware of the risks generally associated with shipping steel scrap, (b) the Claimant had no claims history on inception of the C/L policy, (c) no renewal questionnaire was requested when the C/L policy was renewed annually, and (d) no loading survey was requested before each shipment.
The Court disagreed, viewing this as “an attempt [to] improperly reverse the burden of ensuring a fair presentation of the risk”. The cargo had been presented as a simple risk and AMICA had not been told enough to be put on notice to make further enquiries about the change in incidence of fires.
Waiver
The Court found that the relevant test for waiver was whether the Defendant could be shown to have only limited concerns, which did not extend to the undisclosed information i.e. the fires.
The Court rejected the Claimant’s argument that the Defendant waived disclosure by only requesting information on past claims in the questionnaire at inception, and by referencing the claims ratio at subsequent renewals, which the Claimant argued signalled that the Defendant was interested only in incidents giving rise to claims.
Instead, on inception the Defendant sought to confirm that cargo with a risk of fire would not be covered indicating that it would have been concerned about such risks. The Court did not place weight on the questionnaire used at inception, which had been prepared by the Claimant’s own broker so did not specifically reflect information requested by the Defendant.
Inducement
The Court accepted AMICA’s evidence for the Defendant that it would not have renewed the C/L policy at any premium because the exposure was wholly disproportionate to the annual premium of approximately USD 10,000.
The Court was conscious of the case law which warned of post-claim underwriting evidence where, with the benefit of hindsight, an underwriter may consider they would have declined to write the risk had information been disclosed.
However, in this instance the Court accepted that the evidence put forward by the Defendant’s witness was reliable and was supported by expert evidence. It would not have been “commercially viable to write this business if there [was] a real risk of a fire on board a vessel potentially resulting in a large claim“. A prudent underwriter would not have wished to face a “sixth bullet” after having avoided the first five fires and the pattern of fires in short succession indicated a potential quality issue with the cargo signifying a change in the Claimant’s risk profile.
The Court concluded that the correct counterfactual required consideration of what the Defendant’s response would have been if the five fires were disclosed during renewal for the 2022 year. The non-disclosure had itself prevented a contemporaneous investigation from being carried out and the Claimant failed to prove that, had a surveyor been appointed, no issues with the quality of the scrap cargo would have been identified.
Takeaways for Market Practitioners
There has been limited judicial consideration of various provisions in the IA 2015. While this judgment is fact specific, it contains helpful guidance on the various aspects of the duty of fair presentation. Market practitioners should note the following takeaways.
What should be disclosed?
The judgment is a reminder that incidents which are capable of giving rise to claims may need to be disclosed by insureds even if no claim results. Insureds should avoid adopting too prescriptive an approach, and should instead assess the impact of the incident on the level of risk, the number of incidents, the time period in which incidents may have occurred, their frequency and the initial presentation of risk.
The disclosure burden remains with the insured
Where insureds attempt to shift responsibility onto the insurer, underwriters will be assured by findings in the judgment on two related questions. The absence of a renewal questionnaire does not, without more, constitute waiver of the duty of disclosure. Similarly, a general awareness of risks cannot be equated with a presumption of specific knowledge of incidents.
Treatment of insurer’s evidence
While the Courts will carefully scrutinise an insurer’s evidence as to whether it would have written a risk had information been disclosed, and will have in mind the risk of post-event underwriting, there is no formal presumption against the insurer. The Court will analyse the insurer’s approach, and consider the commercial viability of certain actions in the context of the premium earned when deciding whether, and on what terms, the insurer was induced to write the policy.
Cassandra Stead, Trainee Solicitor, assisted in the preparation of this briefing.
