Reasonable search (Insurance Act 2015)

A reasonable search is the enquiry that an insured is required to make under section 4 of the Insurance Act 2015 to identify material circumstances within its organisation so as to satisfy the duty of fair presentation of the risk.

Definition §

The duty of fair presentation under section 3 of the Insurance Act 2015 requires disclosure of every material circumstance that the insured "knows or ought to know". Section 4 defines what an insured "ought to know" as the information which should reasonably have been revealed by a reasonable search of information available to the insured (whether the search is conducted by making enquiries or by any other means).^[1]

The provision recognises that commercial insureds are often complex organisations in which information is dispersed across departments, subsidiaries and external advisers. Rather than imposing an unrealistic absolute duty to know every fact relevant to the risk, the Act limits the insured's constructive knowledge to information that a reasonable search would have revealed. Whether a search is "reasonable" is a question of fact to be assessed against the size and complexity of the insured's business, the time available before inception and the nature of the risk being placed.^[2]

The Act does not prescribe a method for conducting the reasonable search. In practice, insureds and brokers operate by reference to industry guidance, the Law Commission's pre-legislative work and the case law that has begun to emerge on the section. The objective is to identify the individuals within (and, where appropriate, outside) the insured's organisation whose knowledge should be captured, and to extract relevant information from them in a structured way.^[3]

Legal / Regulatory basis §

Section 4 of the Insurance Act 2015 provides the statutory framework. Subsection (1) defines what the insured knows and ought to know. Subsection (2) provides that the insured (other than an individual) knows only what is known to one or more of the individuals who are part of its senior management or are responsible for the insured's insurance. Subsection (6) defines "senior management" as those individuals who play significant roles in the making of decisions about how the insured's activities are to be managed or organised.^[4]

Subsection (6) further defines "the insured's agent" for the purposes of section 4, addressing the position of brokers and other intermediaries. Information that is held by the insured's agent, and which has been received from a third party in the course of negotiating or placing insurance, is attributed to the insured.

Section 6 (knowledge: general) provides that knowledge for the purposes of sections 3 to 5 includes "actual knowledge" and "matters which the person suspected, and of which the person would have had knowledge but for deliberately refraining from confirming them or enquiring about them." This codifies the doctrine of "blind-eye knowledge" in insurance law.^[5]

The Law Commission's 2014 report, which formed the basis of the Act, emphasised that the new regime was designed to "replace the existing absolute and unrealistic duty of disclosure with a more limited duty to make a reasonable search and present the resulting information fairly." The reform reflected market concerns that the pre-2015 rules placed insureds at risk of avoidance for failing to know what they could not reasonably have known.^[6]

How it works in practice §

In practice, a reasonable search is now a structured pre-renewal exercise undertaken jointly by the insured's risk management function and its broker. The exercise typically involves four stages: scoping, enquiry, capture and review.

Scoping involves identifying who within the insured's organisation should be consulted. For a single-site SME, this may be limited to the managing director, finance director and operations manager. For a multinational group, the search may extend to country chief executives, divisional risk managers, legal and compliance heads, and external advisers (including solicitors handling pending litigation). The Act does not require an exhaustive census, but it does require enquiries to be proportionate to the size and complexity of the business.

Enquiry typically takes the form of structured interviews, questionnaires or pre-renewal meetings. Topics commonly addressed include claims and near-misses, regulatory investigations, material litigation, acquisitions and disposals, changes in operations or markets, and any circumstances likely to give rise to claims. Where the risk involves specialist exposures (such as cyber, environmental or professional liability) bespoke questions are developed for the relevant subject-matter experts.

Capture involves recording the responses in a form that can be reproduced if questioned at claims stage. Many brokers now require signed declarations from senior individuals confirming that a reasonable search has been undertaken and that the information presented to insurers is accurate. The resulting disclosure pack typically includes a covering note, an indexed presentation of material circumstances and supporting documentation.

Review involves the broker and the insured's risk function checking the presentation for completeness and clarity before submission to underwriters. The "reasonably clear and accessible" requirement in section 3(3)(b) means that even a well-conducted search will not satisfy the duty of fair presentation if the resulting information is presented as an unstructured data dump.^[7]

Common variations §

The scope of a reasonable search varies considerably by sector and class of business. For SME commercial insurance placed by a generalist broker, the search may be limited to a renewal questionnaire and a short conversation with the owner-manager. For a complex multinational programme, the search may involve multiple workstreams, dozens of interviews and a project plan running over several months.

In financial lines, the search routinely extends to external advisers — for example, litigation solicitors handling pending claims, regulatory counsel advising on ongoing investigations and forensic accountants. In construction insurance, the search extends to subcontractors and design consultants whose knowledge is relevant to the insured project. In marine insurance, the search may include the operator of vessels and crew managers.

Some insureds operate continuous risk-information systems that effectively conduct an ongoing reasonable search throughout the policy period. This approach reduces the renewal burden but raises governance questions about the attribution of knowledge and the timeliness of disclosure to insurers when new circumstances arise mid-term.

Example §

A national engineering consultancy renews its professional indemnity programme on 31 March 2026. Its broker organises a reasonable search exercise over a six-week window. Interviews are held with the chief executive, finance director, head of risk and the partner-in-charge of each of the firm's five practice groups. A separate enquiry is made of the firm's litigation solicitors, who confirm three open matters and one circumstance notification.

The findings are recorded in a 35-page disclosure pack with a structured contents page, a summary of material circumstances and an appendix of supporting documents. Two material matters identified during the search would not have been disclosed without the structured exercise: a recent regulatory enquiry into a competitor that may have implications for the firm's standard contractual terms, and an internal whistle-blowing complaint about a project four years earlier. Both are disclosed and accepted by the insurer.

Six months later, a claim arises out of an unrelated project. The insurer reviews the placement and cannot allege failure to conduct a reasonable search: the documented exercise demonstrates that the duty under section 4 was discharged.

See also §

• /wiki/fair-presentation-of-the-risk/ — the duty for which a reasonable search is conducted
• /wiki/material-circumstance/ — what the search is trying to identify
• /wiki/insurance-act-2015/ — the parent statute
• /wiki/inducement/ — the additional element insurers must show
• /wiki/material-misrepresentation/ — the parallel duty in respect of statements
• /wiki/known-circumstances-exclusion/ — related professional indemnity concept
• /wiki/professional-indemnity-insurance/ — class where reasonable search is especially material

References §

1. ↑ Insurance Act 2015, section 4, https://www.legislation.gov.uk/ukpga/2015/4/section/4
2. ↑ Insurance Act 2015, section 4(1)-(2)
3. ↑ Law Commission and Scottish Law Commission, "Insurance Contract Law: Business Disclosure; Warranties; Insurers' Remedies for Fraudulent Claims; and Late Payment" (Law Com No 353 / Scot Law Com No 238, July 2014), https://lawcom.gov.uk/
4. ↑ Insurance Act 2015, section 4(6)-(8)
5. ↑ Insurance Act 2015, section 6, https://www.legislation.gov.uk/ukpga/2015/4/section/6
6. ↑ Law Commission and Scottish Law Commission, Law Com No 353, July 2014
7. ↑ Insurance Act 2015, section 3(3)(b)