HFW secures significant Commercial Court victory in key Insurance Act 2015 non-disclosure ruling

Global law firm HFW has secured a significant victory for Lloyd’s Insurance Company SA HIG 5321 in a Commercial Court judgment that provides important guidance on the duty of fair presentation under the Insurance Act 2015.

In Cometsambre SA v Lloyd’s Insurance Company SA HIG 5321, the Court found in favour of the defendant insurer, upholding its avoidance of a Charterers’ Liability policy following the insured’s failure to disclose a series of fires prior to renewal.

The HFW team acting for the successful defendant was led by Partner Matthew Wilmshurst, and included Senior Associate Jack Metherell, Associate Bea Bray and Trainee Solicitor Cassandra Stead.

The decision is one of the most significant recent judgments concerning the duty of fair presentation and is a rare example of underwriters successfully defending a claim based on non-disclosure under the Insurance Act 2015. It provides valuable reassurance to insurers and underwriters in the London market following a string of recent decisions that have favoured insureds.

The Court also delivered important findings on the continuing burden placed on insureds to present risks fairly. Rejecting arguments that the insurer should have made additional enquiries, the judgment makes clear that general market knowledge or an insurer’s awareness of broad industry risks cannot be relied upon as a substitute for disclosure of specific circumstances known to the insured.

Matthew Wilmshurst, Partner, HFW:

“This is a significant judgment for the London insurance market – recent decisions in the Commercial Court have left many insurers questioning if the law is too insured friendly, so this outcome will be reassuring to marine insurers.

The Court has provided guidance on the operation of the duty of fair presentation, making it clear that insureds need to inform their insurers of changing circumstances or risks.

In terms of what this means in practice for the shipping sector, the decision highlights the necessity for shipowners to tell their insurers of any operational incidents on vessels which suggest a change in risk, even if those incidents don’t result in shipowners needing to claim on their insurance.

Following this judgment, shipping firms will likely need to take a broader view on what to inform their insurers of when renewing their coverage – whether this be sharing details on fires other incidents with minimal damage for example. In turn, marine underwriters may be more likely to ask for greater details from their insured regarding cargo quality controls, as well as scrutinising previous reported incidents more closely at the point of insurance renewal.”