In Cometsambre SA v Lloyd's Insurance Company SA HIG 5321 [2026] EWHC 1837 (Comm), the Commercial Court (Butcher J) considered an insured's duty of fair presentation of the risk under the Insurance Act 2015 and provides helpful guidance on the same, including materiality of incidents, an insured’s defences of “waiver” and “presumed knowledge” and how a court should assess inducement evidence. 

Background 

Cometsambre, a Belgian scrap metal dealer, obtained Charterers' Liability ("C/L") and Freight, Demurrage and Defence ("FDD") insurance via its broker Concordia. The relevant insurer was Lloyd's Insurance Company SA, underwritten via cover holder AMICA, which renewed Cometsambre's cover on almost identical terms between 2010 and 2022. 

Between May 2020 and October 2021, five fires occurred in Cometsambre's scrap metal cargoes, three on board-chartered vessels (the ORIENT DYNASTY, COMMON SPIRIT and SAKURA) and two in quayside stockpiles at Ghent. None were disclosed to AMICA. The 2022 renewal proceeded on essentially the same terms as previous years. In June 2022, two fires broke out on board the LOWLANDS MIMOSA, giving rise to a substantial claim. It was only then that AMICA became aware of the earlier undisclosed fires and gave notice of avoidance. 

Issues

The principal issues before the court were whether Cometsambre had breached its duty of fair presentation under the Insurance Act 2015 by failing to disclose the earlier fires, and if so, whether Lloyd's was entitled to avoid the policy.  

Knowledge

Cometsambre denied that any relevant person (senior management or individuals responsible for its insurance) had knowledge of one of the fires (a quayside fire in May 2020). The Commercial Court rejected this. A fire which required the attendance of the fire brigade, at the very least, “would have been revealed by a reasonable search of information available to the insured.” Therefore, if individuals responsible for insurance cover at Cometsambre genuinely did not know about the fire in May 2020, they ought to have known. 

The fires were material circumstances

Butcher J accepted the evidence of Lloyd's expert, Mr Howe, that a prudent underwriter would have wanted to take the fires into account in deciding whether to write the risk. “A fire on board is a paradigm example of an incident which can give rise to liability to the shipowner”. Particular significance was attached to the pattern of the fires. During the 12 years between 2008 and 2020, Cometsambre had experienced no vessel fires at all. Between May 2020 and October 2021, it had experienced five fires in a period of approximately 18 months. This suggested a significant change in the risk profile. 

The court rejected Cometsambre's argument that the fires were immaterial because none had given rise to a claim, rather,

“Fires are something that a prudent underwriter would want and expect to be told about, being a paradigm example of an incident capable of giving rise to a claim – and a very large one at that.” 

The court equally dismissed the argument that quayside fires were immaterial to a C/L underwriter because any direct claim would fall to be made against a property policy rather than the C/L policy. Fires in stockpiles destined for loading were alarming precisely because of what they indicated about the nature and composition of the cargo. 

Notice to inquire, presumed knowledge and waiver

Cometsambre argued that, as underwriters had been informed that it shipped HMS 1/2 and shredded steel scrap, they should have known the general risks associated with such business and should have made further enquiries. The court rejected this argument, finding that it amounted to an improper reversal of the burden of fair presentation. What AMICA had been told could not be said to have put it on notice of the need to inquire as to whether there had been a change in the incidence of fires. 

On the question of presumed knowledge, insurers could not be presumed to know of Cometsambre’s specific fires; “still less was it established that AMICA should have presumed there would be five fires in an 18-month period” especially considering that it followed over a decade without any. 

On waiver, the court rejected the argument that the absence of renewal questionnaires and AMICA's focus on the claims ratio signified indifference to undisclosed fires. The absence of renewal questions was not unusual and could not amount to waiver of the insured's fundamental disclosure obligations. 

Inducement

The court commented that:

The AMICA underwriter responsible for the 2022 renewal gave evidence that he would not have renewed the policy had the earlier fires been disclosed. The premium of just over USD 10,000 was commercially incompatible with the real risk of a large fire claim, and the pattern of fires indicated a change in risk profile which made the risk unacceptable at any premium. 

Scrutinising that evidence with appropriate scepticism, given the well-recognised risk that underwriters may convince themselves with hindsight that they would have declined, Butcher J was satisfied it was reliable and should be accepted. 

Outcome and significance

It followed from those findings that Lloyd's was entitled to avoid the contract. 

The decision is a significant reminder that the duty of fair presentation extends beyond matters which have already given rise to a claim. A pattern of incidents, even where those incidents have not resulted in any actual loss or claim against the insured, can constitute material circumstances that must be disclosed, particularly where they suggest a change in the risk profile of the insured's operations. 

Insureds should be reminded that the obligation to make a fair presentation applies to each renewal as a new contract of insurance. The duty of fair presentation cannot be deflected by pointing to the absence of renewal questionnaires or by arguing that underwriters should have asked for more information. The primary obligation to ensure a fair presentation of the risk lies with the insured.