Axa Versicherung Ag v Arab Insurance Group

The judgment provides useful guidance as to the approach the courts will take in assessing causation and whether an (re-)insurer was induced to write a risk which was unfairly presented:

1. First, the Court must determine what needed to be said in order for the presentation to be fair in the view of a reasonable and prudent underwriter - an objective test.
2. Secondly, in assessing whether the unfair presentation induced the particular underwriter to write the risk, the court must consider a “hypothetical broke” which includes not only the material facts that should have been disclosed at the time in order for the presentation to have been fair, but also any additional points the insured/broker would have made in order to encourage the insurer to write the risk - a subjective test.
3. The burden of proof in respect of inducement rests with the (re-)insurer.

Notably, although the relevant treaties in this case were entered into before the Insurance Act 2015 (the Act) came into force, the Court used the terminology (in referring to the “Duty of Fair Presentation”) and applied the principles of the Act nonetheless.

The judgment can be found here.