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A reminder about disclosure and the Insurance Act

A quick reminder from us about your duties of disclosure under the Insurance Act 2015. Under the Act, you are obliged to make a reasonable search in your efforts to disclose every material circumstance which you know or ought to know, or failing that, disclosure which gives the insurer sufficient information to put a prudent insurer on notice that it needs to make further enquiries for the purpose of revealing those material circumstances.

Disclosure must be made in a manner which would be reasonably clear and accessible to a prudent insurer. Every material representation as to a matter of fact must be substantially correct, and every material representation as to a matter of expectation or belief should be made in good faith.

In corporate entities, whose knowledge counts? Under the Act, when deciding what an insured knows, what matters is the knowledge of senior management and of those responsible for arranging the insurance. Senior management includes the board of directors, but also those who play significant roles in the making of decisions about how the insured’s activities are to be managed or organised.

What knowledge? The Act sets out what an insured ought to know. An insured must carry out a reasonable search for information, with what is reasonable depending on the size, nature and complexity of the business. The insured will be deemed to know what ‘should reasonably have been revealed by a reasonable search’ and so information held by non-senior management (but by those who, say, perform a managerial role) may still be assigned to the insured where it would have been reasonable for the insured to seek out that information. Relevant information held by any other person (even those outside the company, such as the company’s agents or beneficiaries of cover) will also be assigned to the insured if a reasonable search should have revealed that information.

Please contact Venture Insurance if you require further information about your duties of disclosure under the Insurance Act 2015.