Reinsurance: non-disclosure and misrepresentation

Questions of inducement can involve complexities that are not always easy to spot. In some cases one is dealing with the binary question of what difference the material fact that was not disclosed would have made to the underwriter. But things will not always be so straightforward. The material fact that has not been disclosed is ex hypothesi something that would have made the risk less attractive to an underwriter.

Had it been disclosed, it is possible, indeed likely, that the broker would have wanted to mitigate its negative effects. This may well have involved disclosing other information in an attempt to persuade the underwriter nevertheless to write the risk. What is the correct test here: is it what the broker would have said, or what hypothetically could have been said?