Misrepresentation: Limit No 2 Ltd v AXA Versicherung AG

The Court of Appeal's judgment in Limit No. 2 Limited v AXA Versicherung AG dismissed three grounds of appeal from the first instance decision. One ground of appeal was allowed, and it is of significance to all insurers, reinsurers and brokers - can a misrepresentation as to a reassureds' present intention at placing persist until and beyond renewal, or does it relate only to the time at which it was made?

The representation that caused the dispute was in a broker's fax. It was sent to reinsurers before the 1996 inception of a 12 month energy excess of loss reinsurance treaty. The fax said that "as a matter of principle [the reassureds] maintain high standards and would not normally write construction unless the original deductible were at least £500,000 ($745,000), preferably £1m". The broker thereby represented that the reassureds intended only to underwrite energy risks with high deductibles. This was inaccurate because high deductible energy business was no