100 insurance law changes proposed

The Law Reform Commission will today launch its insurance contracts report, which will make 100 recommendations for changing legislation that governs agreements between insurance companies and their customers.

The wide-ranging recommendations will include reform of the definition of “consumer”, duty of disclosure, and the onus on insurers to compensate a consumer who has made innocent or negligent mistakes in their disclosure.

The 305-page report says that many of the laws governing Irish insurance date from 18th and 19th-century English case laws. Its authors propose to modernise the laws to reflect that most insurers are multinational corporate bodies with large financial, technical, actuarial, and human resources.

It recommends changing contracts that allow insurers to deny claim payments, if it can be argued that a customer innocently failed to disclose details because they were unaware that such information was relevant.

It further recommends that insurers should not be able to wash their hands of all liability in instances where a consumer has breached contract due to negligence or a mistake.

In such instances, the LRC has recommended that the insurer should be required to make payments that are proportionately adjusted to take account of the mistake and whether the breach of contract affected the specific risk undertaken by the insurer.

The LRC has suggested reforms that would allow third parties intended to benefit under an insurance contract to make a direct claim against the insurer.

Such reforms could see third parties take action against insurers, in instances where the policy-holder is an individual who has died, is missing or whose decision-making capacity is in question, or a company that is in liquidation, receivership or examinership.