Fraudulent insurance claims – development of Common Law rules

There has been much judicial and academic debate in recent years on the scope and effect of the common law rule relating to fraudulent insurance claims. The latest two cases Axa General Insurance Ltd -v- Gottlieb and Danepoint Ltd -v- Allied Underwriting Insurance Ltd add to the body of established case law and follow what now appear to be established principles.

In the case of Manifest Shipping Co -v- Uni-Polaris Insurance Co Ltd [2001], better known as the "Star Sea", the House of Lords confirmed that the duty of utmost good faith does apply after placement but that, in the claims context, the duty is limited to an obligation not to make a fraudulent claim. The question that was left undecided was whether that duty was imposed by Section 17 of the Marine Insurance Act 1906, thereby entitling Insurers to avoid the policy "ab initio" and recoup payments made in satisfaction of previous untainted claims.