The Court of Appeal has upheld the decision of the Commercial Court that a reinsurer failed to establish that material non-disclosure of past loss statistics induced it to enter into two reinsurance contracts: Axa Versicherung AG v Arab Insurance Group  EWCA Civ 96.
In Mutual Energy Ltd v Starr Underwriting Agents Ltd  EWHC 590 (TCC), Mr Justice Coulson considered the proper construction of a clause which prevented insurers from avoiding the policy for non-disclosure unless that non-disclosure was "deliberate or fraudulent". The Judge held that a non-disclosure would only be "deliberate or fraudulent" if the insured deliberately withheld information knowing that it was required to be disclosed. Insurers were not entitled to avoid the policy where the insured withheld information in the honest but mistaken belief that the information did not need to be disclosed.
Insurers successfully avoided a policy on the grounds of inadvertent non-disclosure. The High Court commented on the different outcome that would have been available under the Insurance Act 2015 which comes in to force in August 2016, remarking that the stringent remedy of avoidance under the present law remains a "blot on English insurance law".