The Commercial Court has held that an insurer was entitled to avoid a charterer's liability policy after the insured failed to disclose a number of fires involving its cargo.

Published: 6 August 2026
Authors: Susie Wakefield

The recent Commercial Court decision in Cometsambre SA v Lloyd's Insurance Company SA HIG 5321 provides a compelling illustration of the courts’ approach to assessing whether an insured has complied with its duty of fair presentation under s.3 of the Insurance Act 2015 (the Act), and the consequences of failing to do so.

Background

The dispute relates to a Charterer’s Liability (C/L) insurance policy underwritten by AMICA, as coverholder for the Defendant (Lloyd’s), in favour of the insured Claimant (Cometsambre), a scrap metal dealer.

Lloyd's Insurance Company SA writes European risks for Lloyd’s syndicates; the policies are then 100% reinsured by Lloyd’s syndicates, in this case Hartford's Syndicate 1221.

Cometsambre first approached AMICA through a broker in 2008 seeking C/L insurance in respect of the planned shipping of scrap from its base in Ghent, Belgium.  Through various exchanges, AMICA was informed that the scrap would be non-oily, non-radioactive, non-dangerous shredded steel scrap, excluding motor blocks, borings and turnings, to HMS 1 / HMS 1+2 or ISRI specifications.

Between 2010 and 2022 cover was renewed every year on almost identical terms with little correspondence.  One small claim was made in 2012 in respect of stevedore damage, and in April 2021 Cometsambre gave notice of a potential claim against it in respect of a grounding at Alexandria.

In June 2022 a cargo of Cometsambre’s scrap metal was involved in a fire on board the chartered vessel LOWLANDS MIMOSA, resulting in a claim against Cometsambre under the charterparty.  AMICA were subsequently informed of various other fires involving Cometsambre’s scrap; 10 in total between 2014 and 2022, either quayside or once loaded onto vessels, with 5 of these taking place between May 2020 and October 2021.

Lloyd’s declined to cover Cometsambre in respect of the LOWLANDS MIMOSA charterparty claim on the basis that Cometsambre had breached its duty of fair presentation both in terms of (i) the nature of the scrap being shipped and (ii) the failure to disclose the 5 fires between May 2020 and October 2021.

Cometsambre issued proceedings in December 2024 seeking a declaration that Lloyd’s was obliged to indemnify it in respect of its costs of dealing with the charterparty claim and, to the extent necessary, for any substantive liability incurred in that respect.

Commercial Court judgment

The Court (Mr Justice Butcher) dismissed the claim, finding that Lloyd’s was entitled to avoid the 2022 policy.

On the key issues the Court found as follows:

Materiality

Cometsambre sought to argue that the fire record was not ‘material’ for the purposes of s.3(4) of the Act since:

• none of the fires had given rise to a claim against Cometsambre (in particular, none of the vessel fires had led to a claim by the owners and were therefore not material to a C/L underwriter)
• the quayside fires were not material to a C/L underwriter because any resulting claim would be on Cometsambre’s property insurance policy.

The Court rejected these arguments, preferring Lloyd’s underwriting expert’s evidence that fires were “a paradigm example of an incident capable of giving rise to a claim” which must be disclosed, even if a claim did not materialise.   In particular, the fact that five fires occurred in the 18 months between May 2020 and October 2021 was significant as it indicated a change in the risk profile.

Insurers on notice

Cometsambre argued that since AMICA was aware of the nature of the cargo it should have been aware of the general risks of the business, and had not asked for an updated questionnaire on renewal each year, AMICA was on notice, for the purposes of s.3(4)(b) of the Act, that it needed to make further enquiries.

The Court regarded this as an improper attempt to reverse the burden of ensuring fair presentation of risk; that obligation lies primarily with the insured.  Nothing AMICA was told could be said to have put AMICA on notice of the change in the incidence of fires over the relevant period, in particular the five fires in c. 18 months prior to the 2022 renewal.  Even if (which the Court did not consider necessary in any event) AMICA failed to insist on loading surveys being performed as a matter of course, this would not excuse Cometsambre from disclosing the fires it had actual knowledge of.

Insurers’ presumed knowledge

It was also argued that underwriters could be presumed to know, for the purposes of s.3(5)(d) of the Act, that fires of this nature would probably have occurred.

Again, the Court was not persuaded, finding that Cometsambre failed to establish presumed knowledge of the relevant fires, still less that they had occurred in such quick succession after a long period of none at all, which suggested “a change in the risk profile”.

Disclosure waived

Cometsambre further submitted that the fact it was not asked to fill in an updated questionnaire or to provide further information about risk management, losses, incidents, claims and so on over the years meant a reasonable insured would understand AMICA was “only concerned with Cometsambre’s claim history and were indifferent about fires not giving rise to a claim”.

The Court disagreed.  AMICA’s enquiries at the outset of the relationship were designed to ensure that fire-risky cargo was not being covered.  The fact the initial questionnaire – prepared by the broker rather than by AMICA – only requested information about Cometsambre’s ‘claims record’ could not reasonably be understood as indicating that underwriters were not interested in any fires which had not given rise to a claim.  Neither the absence of renewal questionnaires in subsequent years, nor the dealings between the parties in the round, reasonably be understood to amount to a waiver of disclosure of material circumstances.

Inducement

The Court stressed the need to be circumspect about evidence provided by underwriters on whether they would have declined the risk. The Court’s have recognised that there is an inherent risk that, whilst truthful, such evidence may be incorrect as it may be influenced by the fact that the loss has arisen and the witness is asked to consider what they would have done with the benefit of that knowledge.

Despite that the Court accepted the underwriter’s evidence that disclosure of the fires would have caused him to decline to renew.  Key factors included the low premium, the expense of sending an expert to investigate each incident, the risk any single fire claim could result in substantial exposure, and the change in risk profile evidenced by the increase in fires.

Accordingly, and having already tendered a return of the premium, Lloyd’s was entitled to avoid the policy under paragraph 4 of Schedule 1 to the Act.

Comment

There are still relatively few judgments addressing insurers’ rights to avoid a policy for a failure to give a fair presentation of the risk under the Act.

Whilst the judgment largely turns on the facts of the case, it is a helpful guide to see how the Court will approach the detail of the analysis required under Act, and the various elements that must be established by insurers.   On the facts before the Court, the judgment:

• adopts a holistic approach to materiality, not limited to actual or potential claims against the specific policy, and extending to anything affecting the “overall picture of the risk”
• reinforces that while the Act makes provision for insurers to be on notice or to have presumed knowledge in certain circumstances, this does negate an insured’s primary obligation to disclose material circumstances of which it has the requisite knowledge
• rejects the idea that a ‘failure’ by insurers to specifically to seek out detailed information upon renewal could reasonably be understood as meaning the insurer is indifferent about being informed of material circumstances.

Notwithstanding the outcome in this case, the judgment and its underlying facts also serve as a reminder to insurers and insureds alike of the importance of ongoing meaningful risk assessment and clear forthright communication in reducing the risk of claims and coverage disputes arising in the first instance.