At what point does the duty of disclosure first come into effect during an insurance transaction?

The duty of disclosure first comes into effect at the proposal of the risk. This is the stage in the insurance transaction where the potential insured provides information about themselves and the risk they wish to insure. It is essential for the insurer to assess the risk accurately and set the appropriate premium.

At the proposal stage, the applicant is required to disclose material facts that could influence the insurer's decision to accept or decline the risk, as well as the terms of coverage. This includes all relevant information that may affect the insurer's evaluation, which upholds the principle of good faith or "uberrima fides" inherent in insurance contracts. Failure to disclose material information can lead to consequences, such as the policy being voided or claims being denied later on.

The other stages mentioned—confirmation of cover, inception of the policy, and issue of the policy—carry different implications in the transactional process but do not initiate the duty of disclosure. The duty is firmly tied to the initial proposal phase, making it crucial for the applicant to provide complete and truthful information right from the outset.