The duty of fair presentation under section 3 of the Insurance Act 2015 is measured against what the insured knows or ought to know. Sections 4 to 6 define that knowledge, and for a professional firm the definition is broader than the memory of the person who fills in the proposal.
Section 4(2) provides that a corporate insured knows a matter if it is known to the individuals who are part of its senior management or who are responsible for arranging its insurance. Senior management means those who play a significant role in making decisions about how the firm's activities are managed or organised. Knowledge held by a departing partner about a troubled file does not vanish simply because that person did not personally complete the renewal.
Section 4(6) extends the duty to what the insured ought to know, meaning what should reasonably have been revealed by a reasonable search of information available to it. The search extends to information held by others, including agents and, in some cases, the firm's own departments. A firm cannot shield itself from a material fact by choosing not to look where a reasonable business would have looked.
For most professional firms a reasonable search means canvassing fee-earners for known problems, reviewing the complaints and circumstances registers, and asking whether anything has happened since the last renewal that a prudent insurer would want to know. The scale of the search that is reasonable will depend on the size and resources of the firm. A large accountancy practice is expected to search more widely than a sole practitioner, but both must be able to show they made a genuine and proportionate effort.
Section 5 sets out what the insurer is presumed to know — matters of common knowledge and things a prudent insurer in that class would be expected to know — so the insured does not have to disclose the obvious. Section 6 confirms that references to knowledge include actual knowledge and, in the case of the insured, blind-eye knowledge: deliberately refraining from confirming a suspicion.
The knowledge rules mean that renewal is a firm-wide exercise, not a form-filling one. Management consultants, solicitors and other regulated firms are well advised to document who was asked, what was reviewed, and what the search covered, so that the fair-presentation question can be answered with evidence rather than recollection if a claim later brings it into focus. Apex helps firms build that record into the renewal process.
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.