Axa had sought to avoid two first loss energy reinsurance treaties written by a predecessor of Axa, Albingia Verischerungs AG ("Albingia"), but was unsuccessful. Although Axa was able to demonstrate material non-disclosure of previous loss statistics, Axa had failed to prove that Albingia's underwriter, a Mr Thomas Holzapfel, was induced to write the treaties by reason of that non-disclosure.
Christopher Clarke LJ gave important guidance on the test for inducement, and what needs to be pleaded, or put in evidence, in inducement cases where the content of a fair presentation, and what would have been said to an underwriter on a hypothetical broke, is in issue, recording that: “If the matter is raised for the first time in cross examination (“If this statistic had been revealed and you had been told this, you would have written the risk, wouldn’t you?)” it may provide a good example of cross examination as an art form. But it involves the insurer/reinsurer coming to trial without notice of the hypothetical factual case that he has to meet and being required to answer on the hoof a question which on a presentation in the real world would not require so instant a response.”
In the circumstances, the customary means of pleading to inducement, by way of a “non-admission”, may no longer suffice.
The judgment can be accessed here.