Quite apart from the duty of utmost good faith/fair presentation, insurers might possibly have a remedy for negligent misrepresentation under section 2(1) of the Misrepresentation Act 1967 (where an insured makes misrepresentations when taking out a policy). The relevance of this post the Insurance Act 2015 is that insurers might be able to claim the additional premium which they might have charged in the absence of the misrepresentation as damages under the 1967 Act (a remedy which is not expressly provided for under the Insurance Act 2015, but which insurers might wish to have if they discover a misrepresentation even though no claim has been made).
In Liberty v Argo (see Weekly Update 45/11), the judge held that the insurer's claim for damages for misrepresentation was not "bad law" but suggested that the Court of Appeal should decide whether such damages should be available where the right to avoid has been lost (as it had in that case). The Court of Appeal did not need to decide the point though as the argument was not pursued by insurers. Accordingly, there do not appear to be any reported decisions to date where an insurer has in fact received damages for misrepresentation (probably because prior to the Insurance Act, an insurer would usually choose to avoid the policy instead).
The earlier decision in this case was reported in Weekly Update 28/17 (Aspen Underwriting v Kairos Shipping). The insurers seek repayment of a sum paid under a settlement agreement after discovering that the vessel which they insured had been deliberately sunk by the master, at the request of the owners. In the earlier decision, the judge accepted that the claim for damages based on misrepresentation (not under the 1967 Act) could be brought in this jurisdiction, so long as the "harmful event" occurred here. It was accepted that it did because:
- (a) the settlement agreement was signed here and the insurance proceeds were paid into the brokers' account in London), or
- (b) the misrepresentations were made in London and the insurers were induced here too.
In this case, the court was required to decide whether the English court has jurisdiction to hear a claim for damages brought under section 2(1) of the Misrepresentation Act 1967. Teare J held that it does. He held that the insurers had the better of the argument that a claim for damages under the 1967 Act is a claim relating to tort within the meaning of article 7(2) of the Regulation 1215/2012, and the harmful event took occurred in England (for the reasons given above). Although proof of a contract between the insurers and the defendant will still be needed, the claim remains one which relates to tort. However, permission to appeal on this point was given.
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