Consumer Insurance Contracts Act 2019

1. Interpretation

1. In this Act—

“average consumer” has the meaning given to it by Directive No. 2005/29/EC of the European Parliament and of the Council of 11 May 2005^1 concerning unfair business-to-consumer commercial practices in the internal market and amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No. 2006/2004 of the European Parliament and of the Council;

“consumer” has the meaning given to it by paragraph (a) of the definition of that expression (as it is defined in relation to a financial service) in section 2(1) of the Financial Services and Pensions Ombudsman Act 2017 but, for the purposes of this Act, that paragraph (a) shall apply as if references in it to “financial service” and “financial service provider” were construed, respectively, as references to “consumer insurance contract” and “insurer” within the meaning of this Act;

“continuing restrictive condition” means any condition, however expressed, that purports to require a consumer to do, or not to do, a particular act or acts, or requires him or her to act, or not to act, in a particular manner (and any condition the effect of which is that a given set of circumstances is required to exist or to be maintained or not to exist shall be taken as falling within this definition);

“contract of insurance” means, except where otherwise provided in this Act, a contract of life insurance or non-life insurance made between an insurer and a consumer;

“durable medium” means any instrument that enables a recipient to store information addressed personally to the recipient in a way that renders it accessible for future reference for a period of time adequate for the purposes of the information and which allows the unchanged reproduction of the information stored;

“fraudulent misrepresentation” means a misrepresentation that is false or misleading in any material respect and which the consumer either—

(a) knows to be false or misleading, or

(b) consciously disregards whether it is false or misleading, and “fraudulent” or “fraud” shall be construed accordingly;

“insurance intermediary” has the meaning given to it by Regulation 2 of the European Union (Insurance Distribution) Regulations 2018 (S.I. No. 229 of 2018);

“insurer” means an insurance undertaking, that is to say, an insurance undertaking within the meaning of, as appropriate, Regulation 3 of the European Union (Insurance and Reinsurance) Regulations 2015 (S.I. No. 485 of 2015), Regulation 2 of the European Communities (Non-Life Insurance) Framework Regulations 1994 (S.I. No. 359 of 1994) or Regulation 2 of the European Communities (Life Assurance) Framework Regulations 1994 (S.I. No. 360 of 1994);

“life insurance” has the meaning given to it by Regulation 3 of the European Union (Insurance and Reinsurance) Regulations 2015 (S.I. No. 485 of 2015);

“Minister” means the Minister for Finance;

“non-life insurance” has the meaning given to it by Regulation 3 of the European Union (Insurance and Reinsurance) Regulations 2015 (S.I. No. 485 of 2015).

2. Scope of Act

2. (1) Except where otherwise provided, each provision of this Act applies to life and non-life contracts of insurance entered into, and variations to such contracts of insurance agreed, between an insurer and a consumer after the commencement of the provision concerned.

(2) This Act does not alter or affect any rights or obligations concerning or arising from—

(a) a contract of reinsurance,

(b) a contract of insurance that falls within class 1(d), 4, 5, 6, 7, 11 or 12 referred to in Schedule 1 to the European Union (Insurance and Reinsurance) Regulations 2015 (S.I. No. 485 of 2015),

(c) a contract of insurance involving a special purpose vehicle within the meaning of the European Union (Insurance and Reinsurance) Regulations 2015 (S.I. No. 485 of 2015), or

(d) the duties of the Motor Insurers’ Bureau of Ireland in the conduct of its activities in relation to sections 19 to 21.

(3) No provision of the Marine Insurance Act 1906 applies to a contract of insurance to which this Act applies.

(4) No provision of the Life Assurance Act 1774, as extended to Ireland by the Life Insurance (Ireland) Act 1866, applies to a contract of insurance to which this Act applies.

3. Amendment of Schedule 2 to Central Bank Act 1942

3. (1) The Central Bank Act 1942 is amended in Part 1 of Schedule 2 by the insertion of the following:

“

”.

(2) With respect to the amendment effected to the Central Bank Act 1942 by subsection (1), and that amendment only and so as not to affect the operation of the general law specified in subsection (3), where a reference occurs in any section of this Act, specified in that amendment, to “insurer”, that reference shall be construed, where an insurance intermediary is acting on behalf of an insurer, as including a reference to the insurance intermediary.

(3) The general law referred to in subsection (2) is the general law, as it applies to this Act, whereby an act or omission done or made by an agent, such as an insurance intermediary, on behalf of an insurer is regarded as an act or omission done or made by the insurer.

4. Amendment of section 60 of Financial Services and Pensions Ombudsman Act 2017

4. Section 60 of the Financial Services and Pensions Ombudsman Act 2017 is amended by the insertion of the following subsections after subsection (4):

“(4A) (a) In paragraph (b) and subsections (4B) and (4C) “Act of 2019” means the Consumer Insurance Contracts Act 2019.

(b) Subsection (4B) is without prejudice to the generality of subsection (2) as it operates to enable the Ombudsman to make decisions by reference to, amongst other things, the enactments concerning the financial service concerned, including, as the case may be, the Act of 2019.

(4B) The provisions of section 26 of the Act of 2019 apply in relation to the power of the Ombudsman under subsection (4)(d) to direct the payment of compensation in a complaint involving a contract of insurance as they apply in relation to the power of a court of competent jurisdiction to make an award of damages in a claim under a contract of insurance.

(4C) The power under section 26 of the Act of 2019 shall not be exercised by the Ombudsman to an extent that such exercise would have the result that the total sum of compensation payable in respect of the complaint concerned exceeds the amount which, by way of compensation, the Ombudsman has jurisdiction to direct the payment of under this Act.”.

5. Regulations and codes of practice

5. The Central Bank of Ireland may issue a code of practice concerning the form of, a contract of insurance or any other requirements related to such a contract contained in this Act.

6. Effect of codes of practice

6. A code of practice, made under any enactment or instrument under an enactment, which contains practical guidance that would assist a court or other adjudicatory body such as the Financial Services and Pensions Ombudsman in determining any issue before it in connection with a consumer insurance contract to which this Act applies, shall be admissible for that purpose and may be taken into account.

7. Insurable interest

7. (1) A claim by a consumer under an otherwise valid contract of insurance shall not be rejected by the insurer by reason only that the consumer does not have, or did not have at the time when the contract was entered into, an interest in the subject-matter of the contract.

(2) Where the consumer is required, because the contract of insurance is also a contract of indemnity, to have an interest in the subject-matter of the contract, the interest required shall not extend beyond a factual expectation either of an economic benefit from the preservation of the subject matter, or of an economic loss on its destruction, damage or loss that would arise in the ordinary course of events.

(3) An insurer is not relieved of liability under the contract of insurance by reason only that the name of the person who may benefit under the contract is not specified in a policy document.

8. Pre-contractual duties of consumer and insurer

8. (1) The duties in this section replace, at the pre-contractual stage of a contract of insurance, the principle of utmost good faith (uberrima fides) and any duty of disclosure of a consumer (including any duty on the consumer to volunteer information) that applied prior to the commencement of this section (whether that principle or duty arose at common law or under an enactment).

(2) The pre-contractual duty of disclosure of a consumer is confined to providing responses to questions asked by the insurer, and the consumer shall not be under any duty to volunteer any information over and above that required by such questions.

(3) Where the insurer requests the consumer at the pre-contractual stage to provide information to the insurer, the insurer shall be under a duty to ask specific questions, on paper or on another durable medium, and shall not use general questions.

(4) It shall be presumed, unless the contrary is shown, that the consumer knows that a matter about which the insurer asks a specific question is material to the risk undertaken by that insurer or the calculation of the premium by that insurer, or both.

(5) (a) Where the insurer asks questions these shall be drafted in plain and intelligible language, and the onus of proving that the questions are plain and intelligible shall rest with the insurer.

(b) Where there is an ambiguity or a doubt about the meaning of a question the interpretation most favourable to the consumer shall prevail.

(6) An insurer may use the remedies available under this Act (including the remedy to repudiate liability or to limit the amount paid on foot of the contract of insurance) only if it establishes that non-disclosure of material information was an effective cause of the insurer entering into the relevant contract of insurance and on the terms on which it did.

(7) (a) The consumer shall be under a duty to answer all questions posed by the insurer honestly and with reasonable care (the test of reasonable care being by reference to that of the average consumer).

(b) In determining whether the consumer has complied with this duty, regard shall be had to, amongst other matters, the following:

(i) the type of insurance contract in question and its target market;

(ii) any relevant explanatory material or publicity produced or authorised by the insurer;

(iii) how clear and specific are the insurer’s questions;

(iv) whether the consumer is represented by an agent and the circumstances of that representation; and

(v) that some consumers can be expected to be in possession of more information than others.

(8) The test of what is material, and consequently the scope of questions that the insurer may ask the consumer, are without prejudice to—

(a) the requirements of the Data Protection Acts 1988 to 2018, and

(b) the provisions of the Criminal Justice (Spent Convictions and Certain Disclosures) Act 2016.

(9) Every insurer shall, before a contract of insurance is entered into, or renewed, inform the consumer on paper or on another durable medium of the general nature and effect of the pre-contractual duty of disclosure.

(10) (a) An insurer shall be deemed to have waived any further duty of disclosure of the consumer where it fails to investigate an absent or obviously incomplete answer to a question.

(b) The waiver in paragraph (a) does not apply where the non-disclosure arises from fraudulent, intentional or reckless concealment.

9. Proportionate remedies for misrepresentation

9. (1) This section provides for remedies that are proportionate to the effects of any misrepresentation on the interests of the insurer and the consumer by reference as to whether the misrepresentation was—

(a) innocent (that is, one that was neither negligent nor fraudulent),

(b) negligent, or

(c) fraudulent.

(2) Where a claim is made under a contract of insurance and where the consumer has discharged the duty under section 8 to answer questions honestly and with reasonable care but where an answer involves an innocent misrepresentation, the insurer shall be required to pay the claim made and shall not be entitled to avoid the contract on the ground that there was a misrepresentation.

(3) Where a claim is made under a contract of insurance and where the consumer has discharged the duty under section 8 to answer questions honestly and with reasonable care but where an answer involves a negligent misrepresentation (that is, one that was not fraudulent), the remedy available to the insurer shall reflect what the insurer would have done had it been aware of the full facts and shall be based on a compensatory and proportionate test.

(4) Without prejudice to the generality of subsection (3), where an answer given by the consumer involves a negligent misrepresentation—

(a) if the insurer would not have entered into the insurance contract on any terms, the insurer may avoid the contract and refuse all claims, but shall return the premiums paid,

(b) if the insurer would have entered into the insurance contract, but on different terms (excluding terms relating to the premium), the contract is to be treated as if it had been entered into on those different terms if the insurer so requires,

(c) if the insurer would have entered into the insurance contract (whether the terms relating to matters other than the premium would have been the same or different), but would have charged a higher premium, the insurer may reduce proportionately the amount to be paid on a claim,

(d) where there is not any outstanding claim under the insurance contract, the insurer may either—

(i) give notice to the consumer that in the event of a claim it will exercise the remedies in paragraphs (a) to (c), or

(ii) in the case of a non-life insurance contract only, terminate the contract by giving reasonable notice to the consumer.

(5) Where a claim is made under a contract of insurance and where an answer by the consumer involves a fraudulent misrepresentation or where any conduct by the consumer (relative to the contract or the steps leading to its formation) involves fraud of any other kind, the insurer shall be entitled to avoid the contract of insurance.

10. Provision of information relevant to contract of insurance and interpretation of certain terms

10. (1) Within a reasonable time after concluding a contract of insurance, the insurer shall, where such is relevant to the particular contract, provide the consumer on paper or another durable medium with the completed application or proposal form.

(2) Where there is an ambiguity or doubt about the meaning of a term in any document referred to in subsection (1), the rule of law applicable to contracts of insurance, namely that the interpretation most favourable to the consumer, or beneficiary, as appropriate, shall prevail, applies.

11. Right to withdraw from contract of insurance by notice: cooling-off period

11. (1) Subject to subsection (3), in a case in which the consumer’s entitlement to cancel a contract of insurance is not governed by the European Union (Insurance and Reinsurance) Regulations 2015 (S.I. No. 485 of 2015) or the European Communities (Distance Marketing of Consumer Financial Services) Regulations 2004 (S.I. No. 853 of 2004), a consumer may cancel a contract of insurance, by giving notice in writing of cancellation to the insurer, within 14 working days after the date when the consumer is informed that the contract has been concluded.

(2) The giving of notice of cancellation by a person shall have the effect of releasing the person from any further obligation arising from the contract.

(3) The right to cancel a contract of insurance under subsection (1) does not apply where the duration of the contract is less than one month.

(4) Where the consumer cancels the contract of insurance under subsection (1), the insurer shall not impose any financial cost on the consumer other than the cost of the premium for the period of cover.

12. Renewal of contract of insurance

12. (1) In the case of a contract of non-life insurance, the insurer, when issuing a renewal notice to a consumer, shall provide the consumer with a schedule outlining the following:

(a) any premiums paid by the consumer to the insurer in the preceding five years on foot of the contract, and

(b) a list of any claims, including if such have been made, third party claims, that have been paid, on foot of the contract, by the insurer to the consumer (or, as the case may be, to the third party or parties concerned) in the preceding 5 years, except, where the contract concerned is a health insurance contract in within the meaning of section 2(1) of the Health Insurance Act 1994.

(2) Where there has been any mid-term adjustment made to the contract in any of the previous five years, the information to be provided for the purposes of subsection (1)(a) shall be met by:

(a) the provision of an annualised premium figure for the relevant year or years excluding fees or charges applied as a result of that adjustment, and

(b) a statement indicating that the annualised premium figure shown may not reflect the actual premium paid in the relevant year or years.

(3) In subsection (2) the reference to any mid-term adjustment made to the contract is a reference to any alteration lawfully made to the provisions of the contract, at any time during its currency, that results in a change in the amount of the premium charged or in the application of any fee or other charge.

13. Cancellation of contract of insurance

13. (1) Where, in accordance with the contract, an insurer notifies a consumer that the insurer is cancelling a contract of insurance, the insurer shall repay to the consumer the balance of the premium for the unexpired term of the contract and provide to the consumer the reason or reasons for the cancellation.

(2) The insurer shall not impose any financial cost on the consumer where, in accordance with this section, a contract of insurance is cancelled.

14. Duties of consumer and insurer at renewal

14. (1) The duty of disclosure in section 8 shall not be taken to imply that a consumer who has on a previous occasion discharged that duty of disclosure is under an obligation at renewal of the contract of insurance to provide the insurer with any additional information, whether concerning matters that have changed or otherwise, unless the insurer has expressly required the consumer to do so in accordance with subsection (2).