Duty of Fair Presentation: Insurance Act 2015

A Bristol-based precision engineering firm is approaching its 30 June renewal. The finance director has the prior year’s proposal form ready, the claims experience to hand, and an instinct that “we’ll just send across what we sent last year.” In the intervening twelve months, however, the group has acquired a small subsidiary in Birmingham, the managing director has been interviewed (but not charged) in connection with a Health and Safety Executive enquiry at a client site, and the board has been considering — but not yet announced — a move into additive manufacturing. None of that appeared on last year’s submission. None of it is mentioned in the renewal pack.

If a loss occurs in the policy year, the question that will determine whether the claim is paid is not whether the company “told the truth.” It is whether the company discharged its duty of fair presentation under section 3 of the Insurance Act 2015. This article explains what that duty actually requires, what counts as a “reasonable search,” whose knowledge is in scope, and how a commercial insured can evidence compliance at placement so that, if a dispute arises later, the disclosure file does the talking.

The statutory anchor: section 3 of the Insurance Act 2015

The duty of fair presentation is created by s.3 of the Insurance Act 2015. It replaced the pre-Act duty of utmost good faith insofar as that duty required disclosure (s.14 of the Act removed the avoidance remedy attached to the old s.18 Marine Insurance Act 1906 duty). For all non-consumer (commercial) insurance contracts entered into, varied or renewed on or after 12 August 2016, s.3 is the test.

s.3(1)–(3): the core obligation

Section 3(1) provides that, before a contract of insurance is entered into, the insured must make to the insurer a fair presentation of the risk. Section 3(3) then defines a fair presentation as one which:

• (a) makes the disclosure required by subsection (4);
• (b) 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 fact is substantially correct, and every material representation as to a matter of expectation or belief is made in good faith.

Three things are doing the work here: substance (what is disclosed), manner (how it is disclosed), and honesty/accuracy (the quality of the representations themselves). A defect in any of the three is a breach.

s.3(4): the disclosure limb — two routes

Section 3(4) is the heart of the duty. The insured satisfies the disclosure requirement if it discloses either:

• (a) every material circumstance which the insured knows or ought to know; or
• (b) failing that, disclosure which gives the insurer sufficient information to put a prudent insurer on notice that it needs to make further enquiries for the purpose of revealing those material circumstances.

Route (a) is the gold standard: tell the insurer everything material. Route (b) is the “signposting” alternative — if the insured cannot or does not provide chapter and verse, it must at least flag enough that a prudent underwriter would ask. The “data dump” approach (sending the entire SharePoint folder and hoping for the best) does not satisfy either route, because it is neither focused disclosure under (a) nor a clear signpost under (b).

s.3(5): what the duty does not require

Section 3(5) is often overlooked but is genuinely useful to insureds. In the absence of enquiry, disclosure is not required of a circumstance if:

• it diminishes the risk;
• the insurer knows it;
• the insurer ought to know it;
• the insurer is presumed to know it; or
• it is something as to which the insurer waives information.

Section 5 then expands on “knows,” “ought to know” and “presumed to know” by reference to the insurer. Market knowledge — for example, that a particular industry has been the subject of a recent regulator’s circular — is the kind of thing an insurer will ordinarily be presumed to know.

“Reasonably clear and accessible”: no data dumping

Section 3(3)(b) requires presentation in a manner that is reasonably clear and accessible to a prudent insurer. The explanatory notes and Law Commission report make plain that the intention was to prevent two opposite vices: cherry-picked selective disclosure, and information overload designed to bury the bad news.

In practical terms, a fair presentation should:

• be structured — a logical document or schedule, not raw data attached without commentary;
• highlight matters which would not be obvious from a casual reading (the unusual claim, the regulatory enquiry, the planned acquisition);
• be internally consistent (no contradictions between the proposal form, the broker’s market presentation, and the underlying schedules);
• be proportionate to the size and complexity of the risk — a small motor trade SME does not need the disclosure architecture of a FTSE 250 group.

A 400-page bundle of board papers sent without an index will rarely be a fair presentation, because the prudent underwriter cannot reasonably extract the material circumstances. Equally, a one-line broker email saying “no changes since last year” when there have been material changes is plainly not a fair presentation.

Representations of fact vs representations of expectation

Section 3(3)(c) splits representations into two categories:

• Material representations of fact must be “substantially correct.” A representation is substantially correct if the difference between what is represented and what is actually correct would not be considered material by a prudent insurer (s.7(5)).
• Material representations of expectation or belief must be made in good faith.

This matters because forward-looking statements (projected turnover, anticipated overseas work, intended scope of operations) are not held to a “true or false” standard but to a “held honestly and on reasonable grounds” standard. An insured that genuinely believes, on the information available, that next year’s turnover will be £4 million is not in breach if it turns out to be £5 million — provided the belief was honestly held. If, however, the board had already approved a major contract win that would clearly take the figure past £6 million and that was suppressed, the good faith test bites.

The “reasonable search” under s.4(6)

What does “ought to know” mean? Section 4(6) provides the answer. An insured (other than a consumer) ought to know what should reasonably have been revealed by a reasonable search of information available to the insured. The search may extend to information held by:

• the insured itself;
• any person for whom cover is provided under the policy; or
• (in certain cases) any other person — for example, an agent or third-party administrator.

This is one of the most important provisions in the Act for commercial insureds. It changes the question from “what did the board actually know?” to “what would the board have known had it conducted a reasonable enquiry across the business?”

What is a “reasonable” search is fact-sensitive. The Law Commissions deliberately rejected a one-size-fits-all standard. Relevant factors include:

• the size and complexity of the insured (a single-site SME vs a multinational group);
• the type of insurance (a directors’ and officers’ placement will warrant deeper enquiry into board minutes and regulatory correspondence than a contents policy);
• the cost and time required to obtain the information;
• the practicability of obtaining it from third parties;
• the placement timetable — though a tight renewal timetable is not a complete answer; it is the insured that controls renewal timing.

In practice, the larger and more complex the insured, the more formal the search needs to be — and the more important it is to be able to evidence it.

Whose knowledge counts? s.4(3) and s.4(8)–(9)

Section 4(3) sets the floor. The insured’s “knowledge” includes what is known to:

• (a) the individuals who are part of the insured’s senior management; and
• (b) the individuals who are responsible for the insured’s insurance (typically the in-house insurance manager, risk manager, finance director or whoever handles renewal in practice).

“Senior management” is defined in s.4(8) as “those individuals who play significant roles in the making of decisions about how the insured’s activities are to be managed or organised.” That will routinely cover the board, executive committee members, and (depending on structure) divisional heads — but not, ordinarily, line managers.

Agent and broker knowledge

Sections 4(8) and 4(9), together with s.5, deal with agents. Broadly:

• Knowledge of an agent of the insured (such as the placing broker) acting in connection with the insurance is attributed to the insured, except information that the agent acquired in confidence in the course of acting for a different client and that does not relate to a material change in the risk.
• Knowledge that an employee or other agent would have acquired through a reasonable search is also attributable.

The practical implication is twofold. First, the broker’s knowledge about a client’s risk — derived from the broker’s own files, prior placements and client meetings — will generally be treated as the insured’s knowledge for fair presentation purposes. Second, that does not mean the broker can be required to disclose information about another client. Broker confidentiality is preserved within carefully defined limits.

Common placement traps for broker-handled risks

The cases since 2016, and our own placement experience, show certain recurring areas where reasonable searches are inadequately performed. A non-exhaustive list:

1. Corporate group structures

Where the insured is part of a group, the question is whether parent-level or sister-company information is in scope. If the policy covers subsidiaries, their claims experience, regulatory correspondence and operational changes need to be in the search.

2. Overseas subsidiaries

Information held in a US, EU or Asia-Pacific subsidiary is just as much “available” as UK information for s.4(6) purposes — but is much more often overlooked. Time-zone friction is not a defence.

3. Claims and incidents of acquired businesses

Where an insured acquires another business, that business’s incident history, complaints log and pending claims become part of the consolidated risk. They need to be reflected in renewal disclosure even if the deal closed only weeks before.

4. M&A pipeline

A signed but unannounced acquisition, a near-final disposal, or a fundamental restructuring decided in principle but not executed — all are routinely material to liability and D&O underwriters and routinely missed at renewal because they sit in deal files rather than insurance files.

5. Board and committee minutes

For risks where governance matters (D&O, professional indemnity, cyber), recent board, audit committee and risk committee minutes are a primary source. A reasonable search for a mid-sized group will normally include a sweep of recent minutes.

6. Regulatory correspondence

Section 75 enquiries from the SFO, “minded to” letters from the FCA, ICO enforcement correspondence, HSE improvement notices — these are highly material to a wide range of placements and are easily missed because they sit with general counsel rather than with the insurance function.

7. Director matters

Personal regulatory or criminal matters affecting senior management can be material to professional indemnity, D&O and crime placements. The interaction with the data protection rights of the individuals concerned is real but manageable — usually by disclosing the existence and general nature of the matter rather than personal data.

Practical guidance: building a disclosure file that holds up

The best protection against a future “you didn’t fairly present” allegation is a contemporaneous disclosure file that evidences both what was disclosed and how it was searched for. Our recommended structure for a mid-sized commercial placement is:

1. A placement memorandum addressed by the insured to the broker, identifying senior management, the insurance contact(s), and the scope of the search undertaken.
2. A disclosure schedule listing each material circumstance disclosed, cross-referenced to the underlying documents.
3. A “search log” identifying which functions (legal, finance, HR, ops, IT, subsidiary GCs) were canvassed, when, and what they returned.
4. The broker’s market presentation prepared from that material, with a clear cover sheet identifying any items that warrant underwriter attention.
5. A record of underwriter questions and answers during the placement, so that the s.3(4)(b) “sufficient information” route can be reconstructed if needed.

None of this is mandated by the Act. All of it is, in our experience, the single most effective way to defend an Act allegation if one is later raised.

What the duty does not require

It is worth being clear about the boundary lines. The duty of fair presentation does not require:

• Disclosure of what the insurer already knows or ought to know (s.3(5)(b) and s.5). Industry-wide loss experience, recent market circulars, and matters in the public domain do not need to be re-explained.
• Disclosure of what the insurer waives (s.3(5)(e)). If a proposal form asks specific questions and is silent on a topic, that may amount to a waiver — though insureds should not assume waiver lightly.
• Disclosure of “pure” ignorance. If the insured genuinely does not know a fact and a reasonable search would not have revealed it, there is no breach.
• An impossible standard of perfection. The Act expressly contemplates that a presentation can be fair even if it is not exhaustive, provided the s.3(4)(b) signposting route is used appropriately.

The duty is exacting but it is not a trap. Properly handled by a competent broker and an engaged in-house team, it is entirely manageable.

Frequently asked questions

1. Does the duty of fair presentation apply to renewals as well as new placements?

Yes. Section 3 applies before a contract is “entered into, varied or renewed.” Each renewal triggers a fresh duty in respect of the risk as it then stands. Reliance on prior years’ disclosure is not enough.

2. Whose knowledge inside our business is captured by the duty?

The duty captures the knowledge of senior management (those who play significant roles in decisions about how the business is managed) and anyone responsible for the insurance, plus what a reasonable search across the business would have revealed (ss.4(3), 4(6) and 4(8)).

3. We use a placing broker — does the broker’s knowledge count as ours?

Generally yes. Knowledge of an agent acting in connection with the insurance is attributed to the insured under s.4, subject to limited carve-outs for confidential information acquired in another retainer (s.5).

4. What if we are not sure whether something is material?

The safe approach is to disclose. The Act explicitly permits the s.3(4)(b) route of giving sufficient information to put a prudent insurer on notice that it should ask more — flagging an issue, even briefly, is far better than omitting it.

5. Can we just send the underwriter everything and let them sort it out?

No. A “data dump” is not a fair presentation because it does not meet the s.3(3)(b) requirement of being reasonably clear and accessible. Disclosure must be structured and proportionate.

6. What evidence should we keep of our reasonable search?

A contemporaneous record of who was asked, what they reviewed, and what they returned. A short placement memo, a disclosure schedule and a search log together provide a strong evidential platform.

7. Does the duty apply to information held by overseas subsidiaries?

If those subsidiaries fall within the cover and the information is reasonably available, yes. Geography alone does not exclude information from a reasonable search under s.4(6).

8. What happens if we get it wrong?

The remedies depend on whether the breach was deliberate or reckless, or neither (Schedule 1 to the Act). Innocent and negligent breaches attract proportionate remedies rather than automatic avoidance — a point covered in our separate article on remedies for breach.

Related articles in this series

• Insurance Act 2015: a PI broker’s overview
• The material circumstance test under the Insurance Act 2015
• Warranties under the Insurance Act 2015: the reform explained
• Terms not relevant to the actual loss: section 11 in practice
• Remedies for breach of the duty of fair presentation
• Contracting out of the Insurance Act 2015
• Condition precedent vs warranty post-Insurance Act
• Late payment of claims under the Insurance Act 2015
• Insurance Act 2015: impact on professional indemnity claims

---

Reviewed by the Apex Insurance Brokers technical team, May 2026. Apex Insurance Brokers Ltd is authorised and regulated by the Financial Conduct Authority (firm reference 724952) and is registered in England and Wales (Companies House 07014570). This article is general guidance and is not legal advice; insureds should take advice on specific facts.