Changed Circumstances

In the context of insurance contracts, an insurer under common law has a right to consider the contract discharged if “changed circumstances materially alter the insured risk.”  But what does that mean?  Suppose all that’s happened is that events have occurred that make the likelihood of a payout much more likely.  Does that count?  And if it does, does the insurer get to keep the premium?

Those were the issues for the U.K. Commercial Court in last year’s Swiss Reinsurance Co. v. United India Insurance Co.   John Hanson and Emma Sephton of London’s Barlow Lyde & Gilbert run down the answers (maybe; yes) in Material Alteration To The Insured Risk.

[Frank Snyder]