Duty of fair presentation

Historically, section 17 of the Marine Insurance Act 1906 (MIA 1906), set out the duty of utmost good faith and stated that:

‘A contract of marine insurance is a contract based upon the utmost good faith, and, if the utmost good faith be not observed by either party, the contract may be avoided by the other party.’

This principle was applied to all types of insurance and reinsurance. The remedy for a breach of the duty was avoidance—annulling the policy as if it had never existed (void ab initio). This remedy could often operate very harshly, leaving the insured without insurance for future losses and requiring it to reimburse the insurer for any claims already paid. The duty of utmost good faith applied both before the contract was concluded and during the performance of the contract. Its principal manifestation, however, has been in relation to the insured’s (and their agent’s) pre-contractual duty of disclosure. In particular, MIA 1906, ss 18–20 stated:

1. •

   the duty not to make a misrepresentation to insurers

2. •

   the duty to disclose all material