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

10.70 We welcome views on whether producing brokers should be obliged to pass
information up the chain, so that the final intermediary should be responsible for
passing it to the insurer. However, we would need to be careful to ensure that the
provision did not apply too widely to remote agents. 11
The scope of information covered
10.71 Agents may well have information about the risk to be insured that they did not
receive in the character of agent for the insured. It seems inefficient to excuse its
non-disclosure. It is also difficult to determine what information is received “in the
character of agent for the insured”, or whatever test is to be used. We agree that
it would be harsh on the insured were the insurer able to avoid because of such
“unconnected” information, but that objection falls away if the remedy is to be
damages against the intermediary rather than avoidance of the policy.
10.72 We would make an exception, however, for information which the intermediary is
under an obligation not to divulge, for example information obtained in
confidence.
Conclusion
10.73 We provisionally propose that where a broker breaches section 19(a), the
insurer should no longer be entitled to avoid the policy against the insured.
Instead a remedy in damages should lie against the broker.
10.74 We ask whether:
(1) The right to damages should apply whenever insurance contracts
are placed within the UK, or only where the contract is subject to
the law of a part of the UK?
(2) Producing brokers should be obliged to pass relevant information
up the chain to the placing broker?
(3) The law should specifically state that an intermediary is not
required to disclose information given to it in confidence by a third
party?
11 This would include the type of agents in PCW Syndicates v PCW Reinsurers [1996] 1 WLR
1136 and ERC Frankona Reinsurance v American National Insurance Co [2006] Lloyd’s
Rep IR 157.
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