The principle of utmost good faith has long been one of the cornerstones of the insurance industry. At its core, it means both insurer and policyholder must be open, honest and transparent when entering into an insurance contract. But recent industry commentary suggests that this long-standing principle may be under increasing pressure.
A recent article published by Post Online explores whether the industry is beginning to drift away from this shared commitment to openness and trust. In the piece, industry veteran Brett Sainty highlights concerns that commercial pressure, regulatory scrutiny and wider market dynamics could be gradually eroding the culture of integrity that has traditionally underpinned insurance. (Insurance Post)
🔗 You can read the full article here:
https://www.postonline.co.uk/broker/7959648/why-insurances-culture-of-utmost-good-faith-is-under-threat
The Changing Landscape of Disclosure
Historically, policyholders were expected to disclose all material facts that could influence an insurer’s decision to provide cover. Legislation such as the Insurance Act 2015 modernised this approach by introducing the concept of a “fair presentation of risk.”
This change placed greater responsibility on businesses to present their risks clearly and accurately, while also requiring insurers to engage properly with the information they receive.
However, as underwriting processes become more data-driven and policy wordings increasingly complex, some commentators believe the balance between transparency and commercial pressure is becoming harder to maintain.
Trust Remains Central to Insurance
Insurance ultimately relies on trust. Policies are written based on information provided at the point of placement, and claims decisions often depend on the integrity of that information.
If the principle of good faith begins to erode, the entire mechanism becomes more difficult to operate effectively.
For brokers, this reinforces the importance of clear communication, accurate risk presentation and strong client relationships. Ensuring clients understand what information needs to be disclosed, and why it matters, remains a critical part of the advisory role.
As we have discussed in previous market commentary, underwriting discipline and transparent information are essential for long-term stability in the insurance market.
What This Means for Businesses
For policyholders, the message is simple: transparency matters more than ever. Businesses should ensure they are:
Providing accurate information about their operations and risk profile
Updating brokers and insurers about material changes during the policy period
Maintaining clear documentation of risk management controls
These steps not only help avoid disputes but also strengthen underwriting confidence and support more sustainable insurance relationships.
A Principle Worth Protecting
The doctrine of utmost good faith has served the insurance industry for centuries because it works. While the market continues to evolve through regulation, technology and changing risk landscapes, maintaining trust between insurers, brokers and clients remains essential.
Insurance is not simply a transaction; it is a partnership built on transparency. Protecting that culture benefits everyone involved and ensures the industry continues to function as it should.