Financial Conduct Authority v Arch Insurance: A Case Study

This case study provides an in-depth analysis of the duty of fair presentation within insurance law, primarily focusing on the Insurance Act 2015 and the landmark case of Financial Conduct Authority v Arch Insurance. The study begins by outlining the core principles of the Insurance Act 2015, emphasizing pre-contractual duties, misrepresentation effects, warranty implications, and remedies for fraudulent claims. It then delves into the concept of 'qualifying breach' and its significance in determining insurer liabilities, referencing the Axa Verischerung Ag v Arab Insurance Group case to illustrate the application of fair presentation duties. Furthermore, the study elucidates the obligations of both insurers and insured parties under the 2015 Act, covering aspects such as accurate proposal submissions, transparent disclosure of monetary terms, and timely policy issuance. Finally, the case study examines the Financial Conduct Authority v Arch Insurance case, highlighting its implications for business interruption claims related to the COVID-19 pandemic and subsequent lockdowns, ultimately concluding that the Supreme Court's decision established a new regime for pandemic-related insurance claims. Desklib provides access to this and many other solved assignments to aid students in their studies.

Practical law

Table of Contents

INTRODUCTION
Insurance law means those aspects which is used for having protection done upon the
financial loss that can occur due to risk or uncertain loss. Under these laws insurance is provided
upon various terms. The agency providing insurance is known as insurer and person taking the
insurance is known as insurie. In these laws various aspects related to insurance has been
covered in order to provide proper legal structure for taking insurance. These laws includes
insurance polices and claims in relation to them. These laws are effective in nature as they helps
in making legal aspect covered in more effective manner. Scope of insurance law is wider as it
deals with claims related to insurance that has been made. Nature is dynamic as it impacts the
damage or injury suffered by another party. The main act that has been used within United
Kingdom in relation to insurance is Insurance Act 2015 an important legislation used for making
financial claim legally bind upon another party through relevant information over the fact. The
essay is based upon case study of Financial Conduct Authority v Arch Insurance with the
concept of duty of fair presentation and obligations of insurer and insured under the 2015 Ac.
MAIN BODY
Insurance Act 2015: The act has been formed with the aim and benefit of clarifying
commercial insurance law in relation over three key areas which are pre-contractual duty of
discloser and the effect of misrepresentation at that stage, effect if warranties contained within
policy and insurer's remedies for fraudulent claims(Mora-Sanguinetti and Pérez-Valls, 2021).
Further, act has been focused upon making important changes to your relationship with insurer
and includes rules regarding insurer allowed for rejecting claim in fair manner. In this duty of
fair presentation insureds is required to be disclosed information which would affect
judgement of prudent insurer in deciding over acceptance of risk over the terms. Remedies under
the Act will only be available if there is a 'qualifying breach' of the duty of fair presentation. This
requires the insurer to establish that it was induced to enter into the contract as a result of the
failure of the insured or its broker to provide a fair presentation of the risk. The question
therefore is whether, but for the breach, the insurer would have entered into the contract at all or
would have done so on different terms. In order to understand this concept relevant case that has
to be covered is Axa Verischerung Ag v Arab Insurance Group in this case the determination
over the question weather appellant was entitled for avoiding relevant policy. The court

considered that the duty of fair presentation and the issue of inducement. In the judgement
therefore note policies writer both before and after the Act has been brought in force. In this
the claim is based upon Axa Verishcherung Ag (Axa) which has avoided two loss making
reinsurance treaties for marine energy construction risks entered into Arab Insurance Group
(ARIG) over the grounds that ARIG has failed for making disclose loss statistics for previous
marine energy construction risks(Rentorff, 2019). Second ground is based over statistics which
has been disclosed to Axa's underwriter the level of past loss to decline writer the treaties. The
judgement has been providing guidance in relation upon policies governed by insurance Act
2015. Also court marked out that non-disclosure of material information that is insufficient
without evidence of inducement. Also duty of fair presentation is applied within certain
circumstances which are insured. In this failing make discloser of sufficient information for
putting prudent insurer on notice that is needed to make further enquiry. It makes such discloser
in a reasonable clear and accessible way. This ensures that material representation of fact has
been substantially correct and every materiel representation of expectation is done within good
faith. Also the duty covers about reasonable research in relation to information which has been
provided by third party. It is done in the form of enquiries and various other means(Simons and
Handl, 2019) . This search is dependent over various circumstances required by the policy holder
for determining obligation covered in relation to fair presentation. Also in this proportionate type
of insurance with its nature and size has been covered. This can be understood with the help of
example that is reasonable search for single site business will be very different upon multi-
national company with multiple offices with number of jurisdiction. Obligations of insurer and
insured under the 2015 Act: Under it various kinds of obligations has been mentioned which
are fill the personal form by the parties in correct manner as its part of insurance contract. No
column is blank proposal do not sign blank proposal. It is responsible for any information this
document with proper signature. In this all information requires to be submitted. The insurer
should makes sure that all aspects related to Monterey terms has to be disclosed and then range
of insurer is required to be cleared. The insurer is required to explain all details correctly. Then
in this register nomination within the policy should be filled with proper details. Then the act
allows insurer to make proposal registration with claims, statute and other details. In case of
insured obligations are once the proposal is submitted its is required to be answered by
insurance company within 15 days. They are required to take um matter in writing. If any

additional document has been asked compley immediately. Once the proposal is accepted by the
insurance company, the policy bond should reach within a reasonable amount of time. Policy
conditions is required to be viewed in proper manner and policies regarding it is required to be
taken into written. There various other duties which has to be covered within the act which has
helped in making insurance more effective in nature.
The Financial Conduct Authority v Arch Insurance (UK) Ltd & others [2021]
In this case it has that main aspect covered is based upon commercial insurance policies for
business interruption which covers about claims which emerged due to COVID-19 pandemic and
consequent lock-down. Further, the case is based upon dispute business interruption claims
which are worth£1.2 billion and affecting 370,000 businesses, primarily in the hospitality and
entertainment sectors. The case was first herd in High Court under the commercial division, High
court found sustainability in the favour of Financial Conduct Authority. The ruling of this case
did not find that the insurers were automatically liable for all the tested policy wondering claims.
Instead the regulator stated that each policy is required to be tested against the judgement to
determine coverage. In response to the judgement FCA said that sustainability has been found in
the favour of argument which were based upon key issues. The Association of British Insurers
stated that business interruption policies are not designed for covering unspecified global
pandemics. Then the case was herd by Supreme Court within which appeal made against the
Financial Conduct Authority dismissed. Further, the court held that insurer's claims seemed to
be clearly contrary over spirit and intent of relevant provision of policies and issues. It has been
clearly stated within the definition of 'notifiable disease' as the most relevant clause. Under the
clause Covid-19 is covered in these types of disease and amended clause provided cover for such
disease. This decision become guide for Financial Conduct Authority in relation to 'notifiable
disease' clause.
After analysing the case and judgement passed by Supreme Court it has been observed
that 'notifiable disease' clause. The clause covers “COVID19 pandemic” , above mentioned
aspects of insurance act 2015 has helped in determining that decision passed has helped in
setting new regime for claims which is required to be made Regarding pandemic and lock down
situation. In the case of Zurich v Niramax

CONCLUSION

REFRENCES
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