Insurance Contracts CP - Law Reform Commission

have been forthright in suggesting that the law on warranties tends to favour the commercially
sophisticated insurer over the inexperienced proposer 73 and that no account is taken of the degrees of
culpability involved 74 , but, in general, a well drafted warranty will be given effect. Indeed, even an
obscurely worded one will not necessarily be denied effect, even if some of the most distinguished judicial
minds of the day differ on the meaning to be attributed to the warranty. Anderson v Fitzgerald 75 is of
course the best example of this insofar as three judicial proceedings in Ireland on a net point of
interpretation were set at nought by a unanimous House of Lords.
5.29 The Commission provisionally recommends that legislation should provide that statements of
fact or opinion shall not be converted into a contractual warranty by anything stated in the contract, so
that “basis of the contract” clauses shall be deemed invalid.
(12) Warranties in Irish Law: the IIF Codes of Practice
5.30 As already noted, section 61 of the Insurance Act 1989 provides the Minister for Finance with
the power to prescribe codes of conduct in respect of ―duty of disclosure and warranties‖ when the
Minister considered it necessary in the public interest, after consultation with the insurance industry and
consumer representatives, to do so. The Irish Insurance Federation (IIF) responded by producing various
Codes of Practice. These Codes of Practice reflected the earlier UK Codes and were clearly conceived
to address some of the procedural, formal and substantive objections to warranties.
5.31 The Code of Practice on Non Life Insurance stated:
―Neither the proposal form nor the policy shall contain any general provision converting the
statements as to past or present fact in the proposal form into warranties. But insurers may
require specific warranties about matters which are material to the risk.‖
5.32 The Codes on life assurance and obtaining medical reports stated that the same approach will
hold true in those areas but added that such general provisions could be used in ―life of another‖ policies.
It is to be noted that ―shall‖ rather than ―should‖ appears in this context. The distinction between general
provisions (that may actually have referred to material as well as irrelevant facts) and specific provisions
(which must be material) constituted a significant advance on the common law position and section 33(3)
of the Marine Insurance Act 1906.
5.33 The right to avoid the policy was similarly abridged under the Non-Life Insurance Code of
Practice which provided that the right would not be used on the grounds of breach of warranty or
condition when the circumstances of the loss are unconnected with the breach unless fraud is involved.
In the case of life or life-related policies a more complex provision was in place which essentially provided
that a breach of warranty would not invalidate the claim unless the circumstances of the claim are
connected with the breach and a specific warranty was created, material to the risk, which was drawn to
the proposer‘s attention before or at time of contracting.
5.34 In relation to the provision of completed proposal forms and policy documents the Code was
much weaker, stopping short of imposing a mandatory requirement on the part of insurers to provide
copies, other than upon request or in the course of the insurer‘s normal practices.
5.35 The Codes however also set out a standard in respect of the kinds of question that the insurer
should ask, providing that ―insurers should avoid asking questions which would require knowledge
beyond that which the signatory could reasonably be expected to possess‖. Warranty disputes do not
feature as significant issues in Insurance Ombudsman adjudications.
73
74
75
Abbot v Howard (1832) Hayes 381 at 410-411, per Smith B; Rose v Star Insurance Co (1850) 2 Ir.Jur.206 at
209, per Richards B; Anderson v Fitzgerald (1851) 1 ICLR 271 and see Lord St. Leonards at (1853) 3 ICLR
475 at 488 and 491, cited and followed by McCarthy J, in Keating v New Ireland [1990] 2 IR 383 at 399.
On the innocence of the proposer and lack of care taken by companies and their agents see Griffen v Royal
Liver (1942) 76 ILTR 82.
See (1851) 1 ICLR 27; (1853) 3 ICLR 475.
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