New Bill reforms law to protect consumers taking out insurance
Bill puts onus on firms to make contracts understandable to average consumer
Pearse Doherty: said the legislation shifted the burden of disclosure from the consumer to the insurer to “ask the relevant questions” when deciding whether to insure a consumer
New legislation to enhance consumer protections when taking out insurance has been introduced by Sinn Féin and accepted in principle by the Government.
Sinn Féin finance spokesman Pearse Doherty, who introduced the Consumer Insurance Contracts Bill, said decades of complacency had left the State with insurance laws that were centuries out of date.
The Bill will modernise and reform laws relating to protections for consumers when they take out insurance. Mr Doherty said the legislation shifted the burden of disclosure from the consumer to the insurer to “ask the relevant questions” when deciding whether to insure a consumer.
Mr Doherty said issues around the duty of a consumer to disclose information when applying for insurance featured in about 100 cases a year brought to the courts. He said they worked only in favour of the insurer.
He said the Bill would bring a “real shift in the power relationship between the insurer and the consumer”, and he stressed that “common sense and proportionality” were key.
The Donegal TD said “a small omission should not lead to a complete refusal of a claim”, which can occur currently. A small misrepresentation “should not lead to families or a business being left empty-handed when a fire breaks out or when some other insurable event occurs”.
Blank chequeMr Doherty said consumers who were likely to be negligent in the information given likewise should be treated proportionately.“Mistakes or even negligence should not lead to a blank cheque to insurers to avoid responsibility. Again it is about balance in the power relationship between the consumer and the insurance company.”
He added that “insurers must make the documentation understandable to the average consumer. If there is any dispute about the language the benefit of the doubt lies with the consumer” in the new Bill.
Accepting the Bill in principle, Minister of State for Finance Eoghan Murphy noted that it was based on draft legislation in recommendations by the Law Reform Commission in 2015.
Mr Murphy said the Bill was very relevant to the lives of “virtually all citizens as a contract of insurance is something that most, if not all of us, will enter into at some stage of our lives”, whether motor, health, property or business insurance.
InformationHe said the legislation dealt with the “the onerous requirement for a consumer to disclose information that a hypothetical ‘prudent insurer’ might rely on in deciding whether to insure the consumer”.
Mr Murphy said that since the Law Reform Commission report on the issue was published the priority focus of the Department of Finance had been on issues “such as a review of the insurance compensation fund legislation, flood cover, and the cost of insurance project”.
He said some consideration has been given to this report but it had not to date been a matter of priority.” Nevertheless, the Government is supportive of what the Bill is trying to achieve, and we intend to engage constructively in advance of committee stage.”