Law of Liability Insurance
Page 25
CHAPTER 5
Non-disclosure
Non-disclosure
Although this section of the book (and that before it on misrepresentation) cover the residual rules of applicable common law, it should be kept in mind that as regards non-disclosure in the past liability policies commonly contained clauses that altered the basic legal position.1 Moreover, it should be recalled that significant changes in the law were made under section 138 of the Financial Services and Markets Act 2000 (FSMA), in the form of “rules” and “guidance” by the Financial Services Authority (FSA).2 However, some of these rules apply only to “consumers” in the sense of natural persons acting for purposes outside their trade, business or profession. A major change was made by the Insurance Act 2015. The Act is the outcome of nine years of consultation by the Law Commission and the Scottish Law Commission, which had the task of “tackling the perceived problems” in the law.3 According to section 3, the common law requirement of disclosure of material information was replaced by a duty to make a fair presentation of the risk. Subsection 3 states that:“a fair presentation is one (a) which makes the disclosure required by subsection (4), (b) which makes that disclosure in a manner which would be reasonably clear and accessible to a prudent insurer, and (c) in which every material representation as to a matter of expectation or belief is made in good faith”.