New legislation introduces major reforms

to Insurance law in Ireland

The Consumer Insurance Contracts Act 2019 which has been passed by the Irish Parliament is expected to come into force within the next few months. The date when the Act will come into operation will be announced by the Minister for Finance.

The new legislation represents a major overhaul of Insurance law in Ireland.

The law applies to “Life and Non-life Consumer Contracts” which are defined as contracts with individuals or businesses with a turnover of not more than €3m.

The legislation is comprehensive and the key changes to existing law are as follows:

1. Replacement of the principle of utmost good faith (“Uberrima fides”): - The duty of a Consumer prior to entering into the Contract of Insurance to disclose is now limited to responding to specific questions posed in writing by the Insurer. Consumers are no longer required to volunteer any information beyond that requested by the Insurer. There is also a new obligation on the insurer to make sure that the questions it asks in proposals are specific, clearly drafted and unambiguous.

2. Insurable interest: - It will no longer be possible for an insurer to decline cover solely on the basis that the name of the consumer is not specified in the Policy. Furthermore it will no longer be possible for an insurer to deny a claim by a consumer pursuant to an otherwise valid policy of insurance simply because the consumer does not have an insurable interest in the subject matter of the Contract of Insurance.

3. Basis of Contract Clauses no longer valid: - Henceforth any attempt by an Insurer in a Contract of Insurance to deem a statement made by a consumer to be a "warranty" will be unlawful.

4. Right of third parties to claim against insurers: - The legislation introduces a form of direct recourse against an insurer where a policy holder has died, cannot be found, has become insolvent or where for any other reason it appears to a Court to be "just and equitable to so order”. Third parties who have suffered loss and intended to benefit under an insurance contract may sue the insurance company directly.

5. Proportionate Remedies for Misrepresentation: - Under the new legislation insurers will not be allowed to avoid a Contract of Insurance on the basis of an innocent misrepresentation by a consumer. The legislation provides that the remedy to be availed of by an insurer in response to innocent/negligent misrepresentation must be proportionate and in line with what the insurer would have done had it been aware of the full facts at the time of the negligent/innocent misrepresentation.

If you require any further detail or advice, please contact John Reid in O’Rourke Reid
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This document is for information purposes only and does not purport to represent legal advice.  
© O’Rourke Reid 2020