Fair Presentation and the Counterfactual Question

The traditional law of non-disclosure provided insurers with a powerful remedy when policyholders failed to disclose something material to the prudent underwriter before the policy incepted: avoid the policy and walk away from the risk without paying the claim (needing only to return the premium paid save where there was alleged fraud). The modern approach is very different: not only have the rules of the game changed following major statutory changes but Judges are now increasingly being asked to reconstruct hypothetical negotiations, imagined underwriting discussions, and alternative policy terms to decide what should have happened had the risk been fairly presented.

This brilliant piece written by Professor James Davey* and Dr Katie Richards** of the University of Bristol explores the evolving, and often complicated, role of the counterfactual analysis in insurance law when assessing materiality, inducement, and in determining the appropriate remedy for breach of the duty of fair presentation. It examines the potential shift away from rigid technical rules in insurance law towards a more fact-sensitive assessment of what would actually have happened had an insured complied with the duty of fair presentation. The issues referred to are something that all insurance law practitioners – whatever tribe you align with – have to grapple with and should be reflecting on early in the dispute resolution process. A big thank you to the authors from the Wynterhill team.

*Professor of Insurance & Commercial Law, University of Bristol
**Senior Lecturer, University of Bristol