Cowie v Vitality: A Scottish Blueprint for the Consumer Insurance (Disclosure and Representations) Act 2012

1. Introduction

The decision of Lord Sandison in Gillian Cowie (as Executrix-Dative of the late Mark Cowie) v Vitality Corporate Services Ltd & Others [2025] CSOH 52 is the first fully reasoned Outer House judgment to walk the Scottish courts through every stage of the Consumer Insurance (Disclosure and Representations) Act 2012 (“CIDRA 2012”). The case concerned a £500,000 life assurance policy on the life of Mark Cowie and raised four inter-locking questions:

1. How must proposal-form questions be interpreted, especially where section 69 of the Consumer Rights Act 2015 (“CRA 2015”) might favour the consumer?
2. Did Mr Cowie’s answers amount to “misrepresentations” under CIDRA 2012?
3. If so, were they “qualifying” and “careless” or “reckless” misrepresentations, and would Vitality have declined cover but for them?
4. Could alleged breaches of the insurer’s post-contract duty of utmost good faith defeat the statutory remedy otherwise available?

The court’s answers create a detailed template—a blueprint—for insurers, intermediaries, and litigators on how Scottish courts will apply CIDRA 2012, section 69 CRA 2015, and the residual doctrine of utmost good faith.

2. Summary of the Judgment

• Two misrepresentations proved: (i) nondisclosure of Barrett’s Oesophagus within 5 years; (ii) incorrect statement that recent liver-function tests were “normal”.
• Both misrepresentations “careless” (not reckless), but still “qualifying” under s.4 CIDRA 2012.
• Vitality showed (s.4(1)(b)) it would have declined cover outright if either matter had been disclosed, using 2015 underwriting guidelines.
• Statutory remedy: avoidance of the policy and refund of premiums was upheld; decree of absolvitor granted.
• Utmost good faith defence rejected: Vitality’s poor claims handling was criticised but did not amount to a breach capable of blocking its statutory rights.

3. Detailed Analysis

3.1 Precedents and Authorities Cited

Lord Sandison canvassed an unusually wide compass of case-law. Key citations included:

• Jones v Zurich [2021] EWHC 1320 (Comm) – three-stage test for CIDRA 2012.
• Drake v Provident Insurance [2004] QB 601 – alteration of grounds for avoidance.
• Assicurazioni Generali v Arab Insurance [2003] 2 CLC 242 – inducement by inference.
• Scottish classics on contra-proferentem interpretation (Life Association of Scotland v Foster (1873) 11 M 351).
• English & NI decisions on the ambiguity of “including” (Department of Finance v Quinn [2019] NICA 41).

The judge’s analysis synthesises English commercial-court learning with Scottish authorities, giving them fresh Outer House imprimatur.

3.2 Legal Reasoning

a) Construction of Proposal Questions

• Section 69 CRA 2015 operates within the ordinary construction process once multiple objectively reasonable meanings survive. It is not a mere last-resort rule (¶ 161–162).
• “Including” = open list, not exhaustive: contra-proferentem could not override the plain contextual meaning (¶ 164).
• Phrase “apart from any condition you have already told us about” refers to any historic disclosure, not just answers on the current form—consumer-favourable reading under s.69 (¶ 162).
• “Disorder” means any abnormality or dysfunction, diagnosis immaterial (¶ 163).

b) Establishing Misrepresentation

Two of Vitality’s alleged misrepresentations survived:

1. Barrett’s Oesophagus: ablation on 30 Nov 2010 fell within 5-year window. Mr Cowie must have known of the condition because consent and post-procedure briefing were standard (¶ 181–182).
2. Liver-function tests: repeated abnormal LFTs in 2014 were not a “routine well-person check” and results were plainly abnormal (¶ 172–173).

c) “Reasonable Care” Analysis (s.3)

Factors pointing to lack of reasonable care:

• Life assurance = important contract; reasonable consumer would double-check medical dates.
• Questions were “clear and specific” (s.3(2)(c)).
• Agent’s involvement offered no defence; he played little role.

The Barrett’s misstatement was mistaken but still careless; the LFT answer bordered on reckless but judged careless on a “hairsbreadth” (¶ 190).

d) Causation & Retrospective Underwriting (s.4)

• Underwriting manuals (supplied by Hannover Re) prescribed mandatory decline where: (i) Barrett’s without surveillance > 2 years; (ii) AST/ALT > 4× normal with uncertain aetiology.
• Mr Downes (Vitality) and Mrs Gregory (Hannover Re) applied those 2015 rules to the redacted evidence and independently concluded cover would have been refused.

e) Utmost Good Faith Counter-Attack

Mrs Cowie alleged that Vitality’s claims-handling breaches (template letters, vague reasons, internal appeal defects) disentitled it to rely on CIDRA 2012.

• Lord Sandison accepted the insurer’s conduct was “reprehensible” but found no “material breach” of its duty of good faith sufficient to extinguish the statutory remedy (¶ 193–198).
• He adopted Rix LJ’s view in Drake: an insurer may justify avoidance on any true ground, even if first discovered later.
• CIDRA 2012 is a complete statutory code regarding remedies for consumer misrepresentation; courts should not graft pre-existing equitable bars onto the new scheme (¶ 196–198).

3.3 Impact of the Judgment

i) Proposal-form Drafting & Intermediary Practice

• Insurers must phrase questions with precision; courts will give them an expansive reach if clear and will invoke s.69 CRA 2015 against residual ambiguity.
• Intermediaries should encourage proposers to verify dates and test results; belief that a condition is “cured” does not excuse nondisclosure.

ii) Claims Handling

• Insurers may still avoid despite administrative imperfections, but Lord Sandison’s criticism underscores the reputational and litigation risks of “deceptive evasiveness”.
• Insurers should align appeal letters with actual procedures and disclose the precise questions alleged to be mis-answered.

iii) Scottish Precedent Value

• First Scottish Outer House exposition of CIDRA 2012: English authorities (e.g. Jones v Zurich) now formally woven into Scots law.
• Clarifies interaction of CRA 2015 s.69 with insurance proposals—likely to be cited in consumer-finance disputes beyond insurance.
• Confirms that CIDRA 2012 remedies cannot be cut down merely by generic allegations of insurer bad faith; a higher threshold (e.g. fraud, suppression of evidence) is required.

4. Complex Concepts Simplified

CIDRA 2012

Statute replacing the old common-law duty of “utmost good faith” (for consumers) with a softer duty to take “reasonable care” when answering an insurer’s questions.

Qualifying Misrepresentation

A wrong answer that both (i) breaches the s.2 duty of reasonable care and (ii) would have influenced the particular insurer’s underwriting decision.

Careless vs Reckless Misrepresentation

Careless = negligent; Reckless = knowing or indifferent to truth and relevance. Both let the insurer avoid contract if it proves it would not have insured at all, but only reckless misrepresentations allow retention of premiums.

Section 69 CRA 2015

If a contract term (or proposal-form question) can reasonably bear two meanings, courts must adopt the consumer-favourable one.

Underwriting Manuals

Evidence-based rules (often by reinsurers) telling underwriters what to do when specific medical facts are disclosed—vital for the s.4 “what would have happened” test.

Duty of Utmost Good Faith (post-contract)

An insurer must handle claims honestly and fairly but need not prioritise the insured’s interests over its own. Administrative sloppiness does not automatically forfeit statutory rights.

5. Conclusion

Cowie v Vitality cements a rigorous, four-stage roadmap for Scottish courts applying CIDRA 2012. Insurers can avoid a consumer policy if they:

1. Prove a misrepresentation after consumer-friendly interpretation of the proposal form;
2. Show the consumer failed to exercise the section 3 standard of reasonable care;
3. Demonstrate (with contemporaneous underwriting rules) that they would have refused cover; and
4. Withstand scrutiny of their own claims-handling conduct—serious bad-faith misconduct could still derail avoidance, but mere administrative flaws will not.

For consumers and advisers the message is equally stark: precision matters. Thinking a condition is “cured”, or that earlier historic disclosures are “close enough”, may still sink a claim. Meanwhile, insurers should heed Lord Sandison’s criticism: transparent communication and accurate appeals processes are essential to preserve trust—and to pre-empt collateral arguments about bad faith.

Ultimately, the Outer House has delivered a practical, precedent-setting tutorial on how Scotland will integrate modern consumer legislation with long-standing insurance doctrine—providing clarity that should reduce uncertainty, and litigation, in future life-insurance disputes.