CR269 Non-disclosure – when knowledge of representative will be imputed to insurer


Non-disclosure – when knowledge of representative will be imputed to insurer – constructive knowledge –representative of insurer appointed to assist applicants for insurance in filling out proposals – thereafter to enter such information on an electronic form for assessment by underwriters – representative being told of a relevant condition but failing to enter it on electronic form.


For proposals for insurance the insurer made use of a process which required that a so-called “underwriting schedule” be completed in writing and signed by the applicant, whereupon the information entered on the schedule would then be entered on an electronic application form used by the insurer’s underwriters to evaluate the risk.

In the underwriting schedule the complainant, as applicant, had disclosed a heart disorder controlled by medication. The representative of the insurer who assisted the complainant with the completion of the written application failed thereafter, however, to correctly enter the information on the electronic application form. As a result the insurer’s underwriters were not made aware of and did not consider the heart condition when the risk was evaluated.

The insurer’s stance was that the risk would not have been accepted if the underwriter had been aware of the condition and contended that there had therefore been no consensus between the parties, that no contract had resulted, and that no more than a refund of premiums would be appropriate.


The information obtained from the insurer confirmed that it had itself devised and implemented the particular process. It’s own representative, the person who had assisted the complainant in filling in the underwriting schedule, had also been responsible for entering the written information into the electronic version. It was therefore not in issue that the knowledge of the heart condition had been acquired by the insurer’s representative in the course of her duties as agent on behalf of her principal, the insurer. It followed that it was part of her duty to communicate the information concerned to the principal. The requirements for the application of the doctrine of constructive knowledge (see “General Principles of Insurance Law” Reinecke et al, paragraphs 501 and 501 – pp 357-360) were in the circumstances present. In accordance with this doctrine the knowledge of the intermediary is imputed to the insurer.


The insurer accepted the office’s provisional ruling and agreed to consider the claim on its merits, which it later admitted.

January 2009