Misrepresentation, Non-Disclosure and Breach ... - Law Commission

9.6 The issue is far from new. Reported cases involving agents of insurers date back
to 1892, 2 and there has been a more recent batch of cases involving brokers. 3 It
would appear that for as long as consumer insurance has been sold through
agents, there have been allegations that agents induced misrepresentations.
An example from business insurance
9.7 Mrs A’s was a consumer case, but similar problems arise in the context of
business insurance. In Roberts v Plaisted, 4 for example, Mr Roberts insured a
hotel through a Lloyd's broker. The hotel operated a discotheque, which the
broker was shown when he inspected the premises. Following a fire, Mr Roberts
made a claim for £70,000. The underwriters sought to avoid the contract on the
ground of non-disclosure of the existence of the discotheque. The Court of
Appeal said that “it may seem remarkable” that Mr Roberts would lose his claim,
even though he had shown his broker the discotheque, when the broker was at
fault for not passing on the information. 5 However, that was the state of the law.
The court was only able to decide in favour of Mr Roberts by finding that the
disclosure had been waived.
9.8 Our survey of FOS cases suggests that problems of this kind are particularly
common in complaints by small businesses: they arose in 8 out of the 12 smallbusiness
complaints about non-disclosure and misrepresentation in our survey.
PREVIOUS REPORTS ON THE STATUS OF AGENTS
9.9 In 1957 the Law Reform Committee (LRC) recommended a simple solution to
these issues. It thought that intermediaries should always be considered as the
intermediary’s agent for disclosure purposes:
Any person who solicits or negotiates a contract of insurance should
be deemed, for the purposes of the formation of the contract, to be
the agent of the insurers, and the knowledge of such person should
be deemed to be the knowledge of the insurers. 6
2 See Bawden v London, Edinburgh and Glasgow Assurance Co [1892] 2 QB 534, where an
agent selling accident insurance completed a form on behalf of an illiterate one-eyed man.
The form contained a warranty that the proposer had no physical deformity.
3 Hazel v Whitlam [2005] Lloyd’s Rep IR 168, [2004] EWCA Civ 1600; Friends Provident v
Sirius International [2006] Lloyd’s Rep IR 45, [2005] EWCA Civ 601; Tioxide Europe v
CGU International Insurance [2006] Lloyd’s Rep IR 31, [2005] EWCA Civ 928.
4
[1989] 2 Lloyd's Rep 341.
5 Above, per Purchas LJ at 345.
6 Fifth Report of the Law Reform Committee (1957) Cmnd 62, para 14.
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