(Article from Insurance Law Alert, September 2026)
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Holding
The English Commercial Court held that an insurer was entitled to avoid a charterers’ liability policy because the insured, a Belgian scrap metal dealer, breached its duty of fair presentation under the Insurance Act 2015 by failing to disclose five fires involving its scrap metal cargoes in the period before the policy renewal. Cometsambre SA v Lloyd’s Ins. Co. SA HIG 5321 [2026] EWHC 1837 (Comm).
Background
Cometsambre, a Belgian scrap metal dealer, held charterers’ liability insurance that had been renewed annually since 2010. Cometsambre had presented its scrap metal cargoes as non-hazardous, implying a low risk of fire. Between May 2020 and October 2021, Cometsambre experienced five fires involving its scrap metal: three on board-chartered vessels during loading or discharge and two in quayside scrap stockpiles at Ghent. None of the fires was disclosed to the insurer before the policy renewal for 2022.
In June 2022, a fire occurred during loading of scrap metal onto the chartered vessel LOWLANDS MIMOSA. The fire caused significant damage to the vessel, giving rise to a substantial charterparty claim against Cometsambre. Cometsambre sought an indemnity from the insurer. The insurer contended that Cometsambre had breached its duty of fair presentation under the Insurance Act 2015 by failing to disclose the earlier fires. The court therefore had to decide (amongst other things) whether the fires were material circumstances that should have been disclosed, and whether the insurer would have entered into the policy had the earlier fires been disclosed.
Decision
Butcher J held that the insurer was entitled to avoid the policy due to the insured’s breach of the duty of fair presentation. The court held that, given the initial presentation of the risk to the insurers, a prudent underwriter would have expected a low risk of fire. Further, a prudent underwriter would want to take the fires into account in deciding whether to write the risk, as fires are a “paradigm example” of an incident capable of generating large claims—whether or not the fires in fact gave rise to a claim—and previous fires may speak to the nature of the cargo being shipped by the charterer. Moreover, a pattern of five fires after a long period without significant fire incidents was particularly material as this indicated a significant change in the underlying risk profile. The burden was on the insured to disclose the prior fires, whether or not the insurer raised specific questions about fire history.
Turning to whether the insurer would have renewed the policy had the fires been disclosed, the court acknowledged the well-known risk that underwriters may honestly but unreliably convince themselves, after the event, that they would have declined the risk. Applying a “healthy scepticism” to that evidence, the court nonetheless accepted the coverholder’s testimony that it would not have renewed the policy in 2022 on any terms. The premium was too low relative to the fire exposure, and the pattern of five fires pointed to an altered risk profile.
Comments
The decision illustrates that prior incidents may be material to underwriting even where they have not resulted in claims, particularly where a pattern of similar incidents indicates a change in underlying risk profile. It also reinforces that the insured’s duty of fair presentation is not dependent on the insurer having specifically asked about the circumstances at issue.
The court’s treatment of the question of whether the non-disclosure actually influenced the insurer’s decision is also instructive: it applied a “healthy scepticism” to hypothetical underwriting evidence but was persuaded by the commercial logic that the premium was far too low to justify the fire risk that the insured had failed to disclose.