Cometsambre SA v Lloyd's Insurance Company SA HIG 5321

At renewal, an insured must disclose material circumstances that remain relevant to the risk and unknown to the insurer, even if they should have been disclosed earlier. A circumstance is material if a prudent insurer would want to take it into account; it need not be decisive. General information about a risk does not itself put an insurer on notice of a later change, and silence or the absence of a renewal questionnaire does not by itself waive disclosure. To establish inducement, an insurer must show that, at the time the contract became binding, it would have declined the risk or accepted it only on different terms.

Cometsambre SA sought indemnity from Lloyd's Insurance Company SA HIG 5321 for liability and costs arising from a 2022 cargo fire aboard a chartered vessel. The insurer avoided the 2022 renewal under the Insurance Act 2015, alleging that Cometsambre had failed to disclose five earlier fires involving its scrap cargoes in 2020 and 2021.

The court considered whether the fires were material, whether the information given put the insurer on notice to make further enquiries, whether the insurer was presumed to know of the fires or had waived disclosure, and whether disclosure would have changed the insurer’s decision to renew.

The claim was dismissed. The insurer was entitled to avoid the 2022 policy because the undisclosed fires were material and, had they been disclosed, it would not have renewed on any terms. It had tendered return of the premium.

1. Materiality. Under section 7(3) of the Insurance Act 2015, a circumstance is material if it would influence a prudent insurer’s judgment. It is enough that the insurer would want to take it into account; it need not be shown that the information would have been decisive. The court applied that approach to the five fires, which indicated a changed risk profile after a long period without fires. Fires on the quayside were relevant because they could have occurred aboard a vessel, and the absence of a claim from an earlier fire did not make it immaterial. The court endorsed the materiality analysis in Delos Shipholding SA v Allianz Global [2024] EWHC 719 (Comm).
2. Disclosure, notice and waiver. Each renewal is a new contract. Material circumstances that remain relevant and unknown to the insurer must be disclosed, even if they arose before an earlier renewal: Dalecroft Properties Ltd v Underwriters Subscribing to Certificate No. 755/BA004/2008/IOS/00000282/2008/005 [2017] EWHC 1263 (Comm); Tynefield Care Ltd v The New India Assurance Co Ltd [2025] Lloyd’s Rep IR 621. The information originally supplied about the cargo did not put the insurer on notice of a later increase in fires. Nor was the insurer presumed to know the specific fire history. Applying the reasonable-reader test for waiver, the court found that the insurer’s failure to request updated questionnaires or further information did not show that it had limited its concerns to claims.
3. Inducement. The relevant question was whether the actual insurer would have renewed at the time the 2022 contract became binding. Earlier cautions about post-claim underwriting were useful evidential reminders, not legal rules: Bate v Aviva Insurance UK Ltd [2013] Lloyd’s Rep IR 492; North Star Shipping Ltd v Drake Insurance Plc [2005] 2 Lloyd’s Rep 76; AXA Versicherung AG v ARAB Insurance Group (BSC) [2016] Lloyd’s Rep IR 1. The court accepted the underwriter’s evidence after applying healthy scepticism and assessing the counterfactual that the five fires would have been disclosed at the 2022 renewal. It found that the insurer would not have renewed on any terms.

not stated in the judgment.