Young v RSA [2019] - fair presentation under the Insurance Act 2015

If you sign a proposal form, sign a "statement of fact", or sign anything where you are told that you have made a "fair presentation" of the risk, you are personally engaging the duty under Insurance Act 2015 section 3 ("s.3"). The Outer House of the Court of Session in Young v Royal & Sun Alliance plc gave the first substantive judicial guidance on what that duty actually requires — and in particular what counts as a "reasonable search" under section 3(5).

The case matters in 2026 for two reasons. First, it is the leading authority on a critical operational question: how thoroughly does a buyer have to look inside its own organisation before signing the proposal? Second, it is a reminder that fair presentation is not satisfied simply because you have answered the questions on the form. The duty is broader than the questions. Young is the case insurers cite when they argue that you did not look hard enough.

At a glance

• Court: Outer House of the Court of Session (Scotland)
• Judgment date: 31 May 2019
• Neutral citation: [2019] CSOH 32
• Sector affected: All commercial insurance buyers; the duty applies to PI, property, liability, motor and every other non-consumer line.
• Practical impact: A "reasonable search" requires real interrogation of your own organisation, not a tick-box circulation of the proposal. Failure to enquire of those who would reasonably be expected to know creates a clean breach of s.3.

The facts

Mr Young was a director and effective owner of Kaim Park Investments Ltd, a property holding company. The company's principal asset was a large industrial property in Lanarkshire. Royal & Sun Alliance ("RSA") underwrote the commercial combined policy on the property in the standard market way: proposal form, statement of fact, renewal each year through a broker.

The property suffered a fire in 2013. The loss claimed was in the millions. RSA investigated, declined the claim and avoided the policy. The principal ground was that Mr Young had failed to disclose a previous insolvency event — relating to a separate company in which he had been involved — that on RSA's underwriting guide would have caused the risk to be declined or, at minimum, repriced.

Mr Young's position was that, while the underlying fact was true, the duty of fair presentation did not extend to facts he had personally forgotten or facts held by other directors or associated companies. He had answered the proposal questions to the best of his recollection. The Insurance Act 2015 was in force at the relevant renewal; the test was therefore the new statutory duty, not the old common-law duty of utmost good faith.

RSA argued that the duty under s.3 required Mr Young to make a reasonable search of information available to him — including by enquiry of his fellow directors and accountants. Section 4 ("s.4") defines what an insured "knows" and "ought to know"; section 3(5) ("s.3(5)") imposes the search obligation. RSA said Mr Young had not made any such search. Had he done so, he would have been told about the prior insolvency event and would have disclosed it.

The court was asked to decide, in effect, what "reasonable search" means as a matter of law, and how the burden of proof works between insured and insurer on the question.

The legal issue

The legal question for the court was the meaning of "reasonable search" in section 3(5). Section 3(1) defines fair presentation. Section 3(3) requires disclosure of every material circumstance the insured knows or ought to know. Section 3(5) requires the insured to make a "reasonable search of information available to the insured", and provides that what is reasonable depends on the circumstances. Section 4(6) deems an insured to know information that "should reasonably have been revealed by a reasonable search of information available" to it.

The buyer's argument relied on the language of "reasonable". Mr Young said that what is reasonable for a small property holding company is much less than what is reasonable for a multinational. Asking the company secretary, looking at the file, and answering the questions on the form ought to be enough.

The insurer's argument was that "reasonable search" is an active, organisation-wide obligation. Where a director has knowledge of facts that the company would be expected to enquire about, those facts are deemed known by the company under section 4. Where the proposal asks about material previous events, the duty is to ask the people in the organisation who would know.

The court also had to deal with a closely related question: the standard of proof. To avoid under s.8 and Schedule 1 of the Act the insurer must prove (a) that there was a breach of the duty (b) that the breach was either deliberate, reckless or "qualifying" and (c) but for the breach the insurer would not have entered the contract or would have done so only on different terms. Young required the court to consider how much evidence the insurer had to put up on each of those elements.

The decision

Lady Wolffe held in favour of RSA. The fire claim was declined. The judgment proceeds in stages and the key passages on the "reasonable search" obligation are at paragraphs 175 to 195. In summary:

"[T]he duty of fair presentation under section 3 of the 2015 Act is not satisfied by an insured who answers truthfully such proposal questions as are put to him without making any further enquiry of those within his organisation who might reasonably be expected to hold material information."

The court found that Mr Young had made no real enquiry of his accountants, fellow directors or company secretary about prior insolvency events affecting him or his associated entities. He had not approached the people in his orbit who would reasonably have been expected to hold that information. The proposal therefore failed s.3(5).

On materiality, the court accepted RSA's underwriting evidence that the undisclosed event would have caused the risk to be declined or repriced. The "but for" causation test in Schedule 1 was met. The court found the breach to be deliberate or reckless within section 8; on that footing RSA was entitled to avoid the policy and retain the premium. (The court also discussed the position if the breach had been "qualifying but not deliberate or reckless"; the proportionate remedy would in that case have produced a substantial reduction in indemnity rather than full avoidance.)

The case settled in the higher courts before any reported reclaiming motion altered the headline analysis.

The principle established

The take-away principle in plain English is this. The duty of fair presentation is not a passive duty. It is an active, organisation-wide duty to interrogate the people in your organisation who would reasonably be expected to know about material circumstances. If you do not ask, you cannot say later that you did not know. The Insurance Act 2015 was deliberately designed to replace the old "what did the insured actually know?" question with a tougher "what would a reasonable search have revealed?" question.

Three propositions follow. First, the "reasonable" qualifier scales with the size and complexity of the organisation. A one-person consultancy and a 500-partner law firm do not have the same search obligation in scope — but both have a real search obligation, properly recorded. Second, the duty extends beyond what the proposal form asks. The form does not define the duty; the statute does. Third, the burden of evidencing the search sits practically with the insured. If you cannot show what you did, you will struggle to defeat the insurer's argument that you did nothing.

What this changes for PI buyers in 2026

Young underpins the modern broker conversation about renewal preparation. For any firm renewing a PI policy in 2026, the practical implications are these.

At proposal stage, run a documented, organisation-wide search. List the questions on the proposal. For each question, identify which people inside the firm would reasonably be expected to hold relevant information. Send the questions to those people in writing. Keep their replies. The audit trail is part of the answer; without it, you cannot prove the search took place. We also recommend a separate, open-ended "anything else?" question asked across senior management, capturing material circumstances the proposal form does not directly ask about.

At notification stage, the search obligation continues across the policy year for the purpose of contingent renewal disclosures. Any circumstance that emerges during the year that would have been material at the last renewal is now a material circumstance you know about. Notify it. Disclose it at the next renewal.

At claim stage, anticipate the insurer's "you should have known" argument. Where insurers find an undisclosed historic fact during a claim investigation, the first question they ask is "who in your organisation knew this, and did you ask them at renewal?" Be ready to show that you did.

How insurers will use this case against you if you are not careful. Three ways. First, by demanding the contemporaneous notes of the search. If there are none, expect avoidance arguments. Second, by interviewing your other directors to find out whether they were asked. If they were not, expect avoidance arguments. Third, by retrospectively building an "ought to have known" case from board minutes, financial statements, email traffic and partner meeting notes. Young makes that retrospective case much easier to assemble than the old law did.

Five specific action points for the 2026 renewal:

1. Run a formal s.3 search exercise in writing, two months before renewal.
2. Identify the search population — who in the firm would reasonably be expected to hold material information.
3. Document the questions asked and the answers received. Save the email trail with the renewal file.
4. Add a "catch-all" question in your internal exercise, not just the questions the insurer asks. The duty is broader than the form.
5. Carry the search across the policy year. New material circumstances must be captured for next renewal.

How Apex applies this in practice

We run a documented s.3 search exercise with each PI client before renewal. We provide the population list, the questions, the chase-up template and the recording sheet. The output is a renewal pack that satisfies Young on its face. If a coverage dispute arises later, the pack is the first thing we produce; in practice it short-circuits avoidance arguments before they take root. Where firms have multiple offices, group structures or associated entities, we extend the search across them. For larger PI buyers we offer a year-round "material circumstance log" so that the search is rolling rather than annual.

Related cases

• Mutual Energy v Starr Underwriting — defects in fair presentation and the materiality test.
• Bridgehouse Marketing v Wachsmann — fair presentation duty more generally.
• AIG Europe v Woodman — aggregation; relevant because aggregation exposure is itself a material circumstance under s.3.
• Ted Baker v AXA — conditions and proximate cause.
• Aspen Underwriting v Credit Europe — claims notification.

FAQs

Does Young apply in England as well as Scotland? Yes. The Insurance Act 2015 applies UK-wide. The reasoning in Young on s.3(5) has been adopted by commentators and is regularly cited in English commercial courts when fair presentation is in dispute.

Does "reasonable search" really require me to interview my partners and directors before every renewal? You need to make appropriate enquiries of people who would reasonably be expected to hold material information. For a small firm that may be a meeting; for a larger firm it will be a structured circulation. Either way it should be documented.

What if my firm is very small — am I exempt from the search obligation? No. The size of the firm affects what is reasonable, not whether there is a duty. A two-partner firm should still ask the other partner. A sole practitioner should still consider associated entities, prior firms and accountants.

Does the duty extend to information held by my accountants or other advisers? Yes, in the sense that those are people in your orbit who hold information you can access. Section 4(6) deems you to know what a reasonable search would have revealed; if your accountant holds it and you can ask, then a reasonable search would normally include the question.

What if the proposal form does not ask the question? The duty is broader than the form. Material circumstances must be disclosed even if not asked about. The form is a floor, not a ceiling.

What is the remedy if I breach s.3? The remedy is governed by Schedule 1. A deliberate or reckless breach allows the insurer to avoid the policy and retain the premium. A "qualifying" (non-deliberate, non-reckless) breach gives the insurer a proportionate remedy — either avoidance with return of premium, or different contract terms, or a proportionate reduction of the claim.

Can I rely on my broker to handle the search? The duty is on the insured, not the broker. A competent broker will run the process for you and produce documentation, but the duty in law cannot be delegated. If your broker is not running a documented search, that is a problem you should fix.

Sources

• Young v Royal & Sun Alliance plc [2019] CSOH 32 — Outer House judgment of Lady Wolffe on the Scottish Courts website at https://www.scotcourts.gov.uk and on Bailii.
• Insurance Act 2015 — full text on legislation.gov.uk, in particular sections 3, 4, 7, 8 and Schedule 1.
• The Law Commission and Scottish Law Commission, Insurance Contract Law: Business Disclosure; Warranties; Insurers' Remedies for Fraudulent Claims; and Late Payment (Report Cm 8898, July 2014).
• Lloyd's Market Association guidance on fair presentation, current edition.
• BIBA, Insurance Act 2015: Member Guidance, current edition.

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Legal commentary, not legal advice. The application of these principles to any specific situation requires specialist advice. Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority, FRN 724952.