Insurance Contracts CP - Law Reform Commission

7
CHAPTER 7
FORMALITIES
A
Introduction.
7.01 Irish law does not provide a coherent set of rules requiring an insurance contract to be
negotiated or concluded in tandem with the creation of a written or electronic record of the transaction. A
fragmented body of EU legislation has built up in relation to consumer insurance but the absence of any
general requirement on pre-contractual information being furnished to a proposer, or the recording of
essential terms of the agreement, as well as any requirement to actually furnish the insured with a copy of
the policy (or key terms such as promissory warranties) are shortcomings in the law that need to be
addressed. The Commission is aware of the need to allow flexible contractual practices to operate and
the desirability of keeping transaction costs to a minimum, but these objectives should not be purchased
at the cost of lack of clarity and procedural or substantive fairness.
B
Legislation, Case Law and Codes of Practice
7.02 Isolated examples of legislative provisions which seek to promote greater clarity of purpose
and legal certainty between a proposer and an insurer do exist. The Insurance Act 1936 in relation to
industrial assurance 1 provides exceptions that prove the rule. While the Insurance Act 1989 contained an
enabling provision 2 that would have had a significant impact on pre-contractual negotiations and notice
requirements in respect of the duty of disclosure and warranties, this power was never exercised.
(1) Limited legislative provisions
7.03 The Road Traffic Acts make it necessary for vehicle insurers who issue approved policies on
insurance to issue certificates of insurance in the prescribed form, 3 an understandable provision in
relation to compulsory insurance. Some isolated examples of formal requirements have been identified in
industrial assurances relating to endowment policies, eg funeral expenses, but not only have such
instances been repealed. 4 It appears that in historical terms the interest of Parliament and the Óireachtas
in ensuring that contracts of insurance are evidenced in writing owe much to a desire to create
appropriate targets for stamp duties and levies. 5 Section 22 of the Marine Insurance Act 1906 requires
every contract for marine insurance to be expressed in a policy, the policy being capable of being
executed or issued either at the time of the contract or otherwise. Non-compliance renders the contract
of marine insurance inadmissible in evidence. As was shown in Chapter 2, in relation to the insurable
interest requirement, the Life Assurance Act 1774, as extended into Ireland, requires policies of life
insurance to be in writing with the name of the beneficiary on it. This is not however a ―consumer
protection‖ measure – quite the reverse. Lack of clarity and certainty is also not provided via section 2 of
the Statute of Frauds, 1695. The provision in section 2 of the Statute of Frauds, which directs that a
memorandum is necessary in respect of an agreement that is not to be performed within one year from
the making of the agreement has been held to be fully performed on one side by the payment of the
1
2
3
4
5
Eg. s.61 (contents of proposals to contain some specific terms) and 63 (ministerial power to delete or amend
proposal terms)
s.61.
Road Traffic Act 1961 s.66, and SI 14 of 1962, as amended.
Eg Assurance Companies Act 1909, repealed by section 7(2) of the Insurance Act 1936.
Existing revenue practice is to raise the levy against premiums: see for example section 26 of the Finance Act
2009.
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