Case law summary · Reviewed by Simon Temme, Account Executive · Last reviewed
The first reported decision in the UK to consider in detail the scope of a commercial insured’s duty to undertake a “reasonable search” for material information under section 3 of the Insurance Act 2015.
Mr Kevin Young was the sole director and shareholder of a company that owned commercial premises in Ayr. In November 2016 he obtained commercial combined insurance from Royal & Sun Alliance (“RSA”) through brokers. The policy incepted on 25 November 2016 and the premises suffered an extensive fire on 28 December 2016 causing damage claimed in excess of GBP 7 million.
RSA avoided the policy on the basis that Mr Young had failed to disclose material facts at placement. In particular, RSA argued that Mr Young had failed to disclose that another company associated with him, Kaim Park Investments Ltd, had previously been placed into administration following a fire at a different property. RSA contended this was material to the moral hazard and to the underwriting of the risk.
Mr Young accepted that the information had not been disclosed but argued that he had complied with the duty of fair presentation under section 3 of the Insurance Act 2015. He submitted that the duty only required disclosure of matters known to the insured, or which ought to have been revealed by a reasonable search of information available to him. He maintained that the historical insolvency of an associated company, several years earlier, was not something that a reasonable search would have surfaced as a matter requiring proactive disclosure to underwriters of a new risk.
The case was heard at proof before answer in the Outer House of the Court of Session, with the parties giving evidence and underwriting witnesses called by RSA. The case was one of the earliest contested decisions to apply the Insurance Act 2015 substantively.
The principal issue was whether Mr Young had discharged the statutory duty of fair presentation under sections 3 and 4 of the Insurance Act 2015, and specifically:
Lord Doherty found in favour of RSA. He held that there had been a qualifying breach of the duty of fair presentation. On the facts, the previous administration and surrounding circumstances were material and would have influenced a prudent underwriter’s assessment of the risk.
On the “reasonable search” question, the court accepted that section 3(5) imposes an obligation on the insured to make enquiries proportionate to the size and complexity of its business. For an individual insured controlling a small number of related companies, this included knowing — or taking reasonable steps to ascertain — the loss and insolvency history of those associated entities where they bore on moral hazard.
Lord Doherty further held that the breach was such that RSA was entitled to avoid the policy under Schedule 1, having established that the non-disclosure was at least reckless, and that the insurer would not have written the risk on any terms had fair presentation been made.
The judgment makes clear (paraphrased) that the standard of a “reasonable search” is contextual: it depends on the size, complexity and sophistication of the insured, and on the nature of the risk presented. It is not a counsel of perfection, but it is more than passive recollection.
The duty under section 3(1) of the Insurance Act 2015 to make a fair presentation is informed by section 3(5), which deems an insured to know what should reasonably have been revealed by a reasonable search of information available to it. What constitutes a “reasonable search” is fact-sensitive: it is calibrated to the size and complexity of the insured’s operations, the nature of the risk, and what a prudent insured in that position would do. Where a moral-hazard fact concerning an associated company would have influenced a prudent underwriter, the insured cannot rely on its own failure to make enquiry as an excuse for non-disclosure.
Young v RSA is significant as one of the earliest substantive judicial considerations of the Insurance Act 2015’s duty of fair presentation. It establishes several practical points:
For brokers, the case is a clear reminder of the importance of structured pre-placement enquiries — particularly into associated companies, prior losses, criminal proceedings and insolvencies — and of documenting the search undertaken.
Author: Matt Bartlett, Director, Apex Insurance Brokers Ltd. Authorised and regulated by the Financial Conduct Authority (FRN 724952). Company registration 07014570 (England & Wales). This article is general information, not legal advice. Last reviewed: June 2026.
Apex Insurance Brokers serves UK professional services firms and commercial businesses. Call 0117 325 0027, email hello@apexinsurancebrokers.co.uk, or request a quotation.
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