Professional Liability Guide

PROFESSIONAL LIABILITY GUIDE

An insurance broker is not, however, required to canvass every possible policy exception. It was held in PC Case Gear Pty Ltd v Instrat Insurance Brokers Pty Ltd (in liq) 500 that the exact scope and nature of the duty to warn will be informed by the relationship between the broker and client, the communications between the broker and client from time to time, the nature of the client’s activities, and the expertise and experience of the client. 501 When will a reasonable person in the circumstances be expected to know a matter is relevant to the insurer’s decision? The requirement in section 21(1)(b) of the ICA directs attention to the state of mind of a reasonable person in the circumstances of the insured.

In Prepaid Services Pty Ltd & Ors v Atradius Credit Insurance NV it, it was said:

‘… “matter” describes anything which is known to the insured which also is known to be relevant, or that could be expected to be known to be relevant, in each case in the respects described above. This requirement directs attention to the state of mind of a reasonable person in the circumstances of the insured and protects the insurer against inadequate disclosure by an insured who is unreasonable, idiosyncratic or obtuse: CGU Insurance Ltd v Porthouse (2008) 235 CLR 103.’ 502

Matters that do not need to be disclosed The duty of disclosure does not require the disclosure of a matter: 503

that diminishes the risk; that is common knowledge;

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ƒ that the insurer knows or, in the ordinary course of the insurer’s business as an insurer, ought to know; or ƒ to which compliance with the duty of disclosure is waived by the insurer. Further, where a person either failed to answer or gave an obviously incomplete or irrelevant answer to a question included in a proposal form about a matter, the insurer shall be deemed to have waived compliance with the duty of disclosure in relation to the matter. 504 The mere fact that information is held on files somewhere within an insurance company is insufficient to fix that insurer with knowledge of information for the purposes of non-disclosure unless the information can ‘reasonably be said to be in the minds of those officers of the insurer who are responsible for the decision whether to contract’ . 505 An insurer will not be held to have knowledge of a matter unless a responsible officer of the company who either appreciates or should appreciate its significance possesses the knowledge. 506

500 (2020) 379 ALR 732. 501 Ibid 758. 502 (2013) 302 ALR 732, 756.

503 ICA s 21(2). 504 ICA s 21(3). 505 Macfie v State Government Insurance Office (Qld) [1984] QSC 182, 9. 506 Evans v Sirius Insurance Co Ltd [1986] VicSC 475.

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