Non-disclosure and inducement

Lewis v Norwich Union Healthcare Ltd [2009] EW Misc 2 (EWCC), a decision of Recorder West-Knights QC in the Central London County Court, is a further reminder to underwriters that the law relating to non-disclosure these days requires proof not just of objective materiality but also of actual inducement. If the insurers do not put up the underwriter responsible for writing the risk, they significantly imperil their chances of proving inducement. If the underwriter can be shown to have acted imprudently in any event, then those chances are even further reduced.

Lewis: the facts

In March 1999 Mr Lewis, then an electrician, sought to obtain income protection health cover, and appointed AG as his agent for this purpose. The proposal form was completed by AG by writing down the answers given by Mr Lewis to the questions. He disclosed that he suffered from irritable bowel syndrome and had undergone operations for varicose veins on his ‘backside’. The insurers, having received the form, asked for full details from his GP. The GP’s report also referred to neck pains suffered by Mr Lewis, which had not been mentioned by him on the form. This led to the insurers sending Mr Lewis a medical questionnaire in relation to his neck pain, which he completed on 23 April 1999 and on which he stated that he had suffered from pain every day for about two years. Mr Lewis was then examined by an independent doctor, Dr Shah, who concluded that Mr Lewis was an ‘average’ risk and that his neck movements were normal. An allergy test was also undertaken. On 28 July 1999 Mr Lewis visited his GP, the judge finding as a fact that the purpose of the visit was to obtain confirmation for his accountant of the periods when he had been unable to work. At that visit he complained of knee pain. His left knee was examined, but no serious problem was found. On 27 August 1999 Mr Lewis informed by the insurers that the allergy tests showed that he was allergic to wheat and dairy products.