Material Alteration To The Insured Risk

Originally published in The Insurance Law Quarterly: Winter 2005

At common law, an insurer faced with changed circumstances which materially alter the insured risk during the course of the policy is entitled to treat the insurance contract as automatically discharged. Earlier this year, the Commercial Court in Swiss Reinsurance Co v United India Insurance Co Ltd (2005) restated the important distinction between such a material alteration and a change in the risk which merely renders it more likely that a loss will occur, which will not entitle the insurer to terminate the contract. The Court also considered when an insured is entitled to a return of premium in these circumstances.