Section 3 of the Insurance Act 2015 sits at the centre of every commercial professional indemnity placement. It replaced the old common-law and Marine Insurance Act 1906 duty of disclosure with a single statutory duty of fair presentation, which a commercial insured owes before the contract is entered into, at renewal, and on any material variation of cover.
Under section 3(3) a fair presentation is one that discloses every material circumstance the insured knows or ought to know, or failing that gives the insurer sufficient information to put a prudent insurer on notice that it needs to make further enquiries. The disclosure must be made in a manner that is reasonably clear and accessible to a prudent insurer, and every material representation of fact must be substantially correct, every representation of expectation or belief made in good faith.
A circumstance is material, under section 7(3), if it would influence the judgement of a prudent insurer in deciding whether to take the risk and, if so, on what terms. For a professional firm this typically covers claims and circumstances history, disciplinary matters, changes in the type or size of work undertaken, high-risk instructions, and the loss of a key person. The test is the prudent underwriter, not the individual handling the account.
Section 3(3)(b) is explicit that disclosure is only fair if it is presented in a reasonably clear and accessible manner. Burying a material fact inside a large undifferentiated bundle of papers — the so-called data dump — does not amount to fair presentation. A firm cannot satisfy the duty simply by handing over everything and leaving the underwriter to find the point that matters.
The practical consequence is that renewal presentations reward organisation. A firm that keeps a live circumstances register, records the reasoning behind any borderline notification, and signs off its proposal at partner level is far better placed to show it made a fair presentation than one that completes the form from memory the week cover expires. Solicitors renewing under the SRA minimum terms, accountants placing cover to satisfy ICAEW requirements, and surveyors under the RICS rules all owe the same section 3 duty, whatever their regulator's own presentation rules add on top.
Apex works with professional firms to structure the presentation so that material facts are visible rather than buried, and to document the process in case the fair-presentation question is ever tested on a claim. The remedies an insurer holds where the duty is breached are set out separately in section 8 and Schedule 1.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 724952. This entry is general information, not advice on any particular policy.