Change in risk

Effect on policy and premium

In the absence of any express contractual provision, the law provides some protection for an insurer who, having insured a risk, faces changed circumstances beyond his original contemplation. A distinction is drawn between circumstances which may make a loss more likely to occur and circumstances which render the risk entirely different from that originally accepted: in the former case the insurers have no right to withdraw from the contract or to treat it as terminated, but in the latter the risk is regarded as automatically discharged. Circumstances of the latter type were found by Morison J to have come into existence in Swiss Reinsurance Co v United India Insurance Co Ltd [2005] EWHC 237 (Comm), [2005] Lloyd’s Rep IR (forthcoming), raising issues as to whether the policy precluded the insurers from relying upon their usual rights and, if not, whether the assured was entitled to a return of any part of the premium.