INSURANCE CONTRACTS of all types, whether to cover a person’s home, car or life, should be more clearly regulated by law, according to the Law Reform Commission.
In a consultation paper published today, the commission notes that insurance contract law is based on a combination of long-established judge-made law, Acts of the Oireachtas, the Financial Regulator’s code and voluntary codes of practice developed by the insurance industry.
It recommends that regulatory bodies (in particular the Financial Regulator and the National Consumer Agency) continue to liaise with each other to develop comprehensive statutory codes of practice setting out standards of best practice. These should build on the standards developed by the Irish Insurance Federation and on the statutory model of the Financial Regulator’s Consumer Protection Code 2012 and would apply to consumer insurance contracts and those involving small and medium enterprises (SMEs).
Such statutory codes of practice should be admissible in evidence in legal disputes about insurance.
The commission also recommends that the duty of disclosure of relevant information prior to taking out an insurance policy should be restricted to facts and circumstances of which the person seeking insurance has actual knowledge. It should not include information of which the person should have been aware.
The current duty to provide “true” answers should be replaced by a duty to answer specific questions honestly and carefully. The insurer must ensure any question posed in writing is in plain, intelligible language and is specific, and it should be up to the insurer to follow up an incomplete answer.
It also recommends a redefinition in legislation of “insurable interest” to cover any insured matter from which the insured person may benefit or be prejudiced by its loss. Currently, there has to be a legal relationship between the insured person and the matter that is insured. In relation to life insurance policies, the commission recommends that it be extended to include civil partnership, cohabitation and other familial relationships.
The recommendations will now be discussed and a final report will be prepared.