IGNORANCE IS BLISS

Misrepresentations made by a broker about his reinsured’s policy on inwards deductibles could allow the reinsurer to avoid the policy even though the reinsured did not know the representation had been made, the High Court has ruled. CMS Cameron McKenna lawyer Jonathan Thorpe says that in Limit No 2 Ltd v Axa Versicherung AG the court also confirmed that avoidance of a policy would automatically avoid any extended policy period agreed by endorsement to that policy. However, avoidance of the endorsement would not necessarily automatically involve avoidance of the original policy. Thorpe says: “It will not be necessary to show a reiteration of the misrepresentation or non-disclosure prior to the conclusion of the endorsement.”