The duty of fair presentation in section 3 turns on what the firm knows. Section 4 of the Insurance Act 2015 tells you whose knowledge that is. For an insured that is not an individual, the firm knows what is known to its senior management, and what is known to the people responsible for arranging its insurance, typically the partner, director or office manager who completes the proposal.
Section 4(8)(c) describes senior management as those who play significant roles in making decisions about how the firm's activities are managed or organised. In a small practice that may be one or two people. In a larger partnership it captures the management board. The point is that knowledge sitting with a junior fee-earner is not automatically attributed to the firm, but knowledge held at the top is.
Section 4(6) sets out what a firm ought to know: whatever 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 structures, group companies. A firm cannot escape disclosure by choosing not to look; nor is it required to conduct an unlimited inquisition. What is reasonable depends on the size and nature of the practice.
For a professional firm this means the proposal process should include a genuine internal check. Have any circumstances been raised that might give rise to a claim? Has a client expressed dissatisfaction in writing? Section 4 makes the firm responsible for surfacing those matters, not just recording what the signatory happens to remember. Architects and engineers running multiple live projects, discussed in the architects' PI guide, particularly benefit from a structured internal canvass before renewal.
Knowledge held by the firm's agent acquired in the course of acting as agent can be attributed under section 4(3). This is one reason a firm should keep its broker properly informed. Apex documents the presentation with clients such as those in the accountants' PI guide so the reasonable search is evidenced rather than assumed.
Section 4 governs the firm's knowledge; section 5 governs the insurer's. The Act deliberately balances the two, so a firm is not penalised for failing to disclose something the insurer already knew or is presumed to know.
Because section 4 measures the firm against what a reasonable search would have revealed, the firm's own record of that search becomes important evidence. A short internal note showing who was canvassed, what fee-earners were asked about potential circumstances, and when the exercise was carried out will help demonstrate that the search was reasonable if the presentation is ever questioned. The larger the practice, the more structured this needs to be. A single email to all partners asking for notification of any client dissatisfaction, kept on file, is a modest step that materially strengthens the firm's position under section 4.
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.