6 Denying Liability
This chapter focuses on the duty of fair presentation and the duty of utmost good faith. Before any reinsurance contract is concluded, the reinsured has to make a fair presentation of the risk to the reinsurer. A reinsured must disclose every material circumstance which the reinsured knows or ought to know or, at least, circumstances which would put a prudent reinsurer on notice that it needs to make further enquiries. That disclosure must be in a manner which would be reasonably clear and accessible to a prudent underwriter. A failure to give a fair presentation, if established, may entitle the reinsurer to avoid the contract without returning the premium where the reinsured has been deliberate or reckless or with a return of premium if the insurer would not have entered into the contract on any terms had the information provided been accurate and complete or where the parties have contracted out of the regime imposed by the Insurance Act 2015. The genesis of the duty of utmost good faith was a protection for insurers and reinsurers because the proposer knew everything about the risk and the underwriter knew nothing.