Insurance Contracts CP - Law Reform Commission

waiting period under a policy said to be an ―upgrade‖ of a previous policy was not
permitted. Compensation of €2,000 to the complainant was also awarded.
6.35 The decisions of the non-statutory Insurance Ombudsman of Ireland contain overt references
to the 1995 Regulations.
6.36 In Case Study 95 48 , the Insurance Ombudsman of Ireland took a cautious approach on the
issue of jurisdiction. The case involved an issue of interpretation relating to a holiday insurance
exclusion. While the Insurance Ombudsman noted that the insurer was relying on the exclusion in Recital
19, the clause was upheld on the basis that:
It was a common exclusion and not unusual
It was not unfair as it limited cover
The policy itself was clear on what was and was not covered.
6.37 The Insurance Ombudsman also ruled that the question whether an exclusion clause should
be deleted from a policy was an underwriting decision outside the jurisdiction set by the IIF‘s terms of
reference for the Scheme. Nevertheless, several of the early adjudications by the Insurance Ombudsman
reflect a fair and reasonable terms approach. For example,
Imposition of penal compound interest rates on premium arrears and failure to notify the
insured 49 was overturned.
Insisting on strict contractual requirements of proof, as in the case of a theft on holiday
abroad, when adequate evidence of loss was available from other sources 50 was held not
to be fair and reasonable.
6.38 Ambiguous terms 51 , or reliance upon an unreasonable interpretation of a term, expression, or
an exclusion 52 , were also successfully contested under the non statutory Ombudsman scheme between
1992 and 1998.
(8) The PEICL Recommendation
6.39 Article 2:304 of the PEICL is modelled on the 1993 Unfair Contract Terms Directive, 93/13/EC.
The Article has been crafted in order to respond to the specific context of mass marketed consumer
insurance products. Article 2:304 provides:
Abusive Clauses
(1) A term which has not been individually negotiated shall not be binding on the
policyholder, the insured or the beneficiary if, contrary to the requirements of good faith
and fair dealing, it causes a significant imbalance in his rights and obligations arising
under the contract to his detriment, taking into account the nature of the insurance
contract, all the other terms of the contract and the circumstances at the time the contract
was concluded.
(2) The contract shall continue to bind the parties if it is capable of continuing in existence
without the unfair term. If not, the unfair term shall be substituted by a term which
reasonable parties would have agreed upon had they known the unfairness of the term.
(3) This Article applies to terms that restrict or modify cover but it applies neither to
(a) the adequacy in value of the cover and the premium, nor to
(b) terms that state the essential description of the cover granted or the premium agreed,
provided the terms are in plain and intelligible language.
(4) A term shall always be regarded as not individually negotiated when it has been drafted
in advance and the policy holder has therefore not been able to influence the substance
48
49
50
51
52
Digest of Cases 1992-1998.
Case Study 119.
Case Study 84.
Case Studies 3, 83 and 131, for example.
Case Studies 24, 94, 128 and 134, for example.
147