CMFAS BCP Principles of Insurance question: cannot avoid a policy after issue for a misstatement in the proposal UNLESS

Answer: D. Fraudulent, or material to the risk

Under the common-law duty of utmost good faith, which Singapore courts apply to insurance contracts, an insurer generally may avoid a policy for a misstatement only if it was material to the risk (it would have influenced a prudent underwriter and induced the contract) or was made fraudulently. An honest, immaterial error does not entitle the insurer to avoid. The Insurance Act 1966 does not codify this rule: s 23(5) only requires a Singapore insurer's proposal form to warn prominently that a proposer who does not fully and faithfully give the facts as they know or ought to know them may receive nothing from the policy. Whether the statement was written, what it concerned or how soon it was discovered does not decide the point.