Insurance Contracts CP - Law Reform Commission

premium, thus taking the contract outside the Statute, even in long term insurance contracts. 6 As
indemnity insurance is normally an annual contract at most, so the question should not arise in any case.
In the case of contracts of indemnity insurance the provision in the Statute that requires a memorandum
in relation to a special promise to answer for the debt, default or miscarriage of another person 7 is also
not relevant 8 because an insurer does not answer for the default of another – the insurer is directly liable
and there is a strong line of Canadian law, for example holding that oral contracts of insurance are
enforceable because of the existence of direct liability. 9
7.04 Some sections of the Irish insurance market have however been identified as ripe for a process
of prescriptive regulation vis-à-vis contractual practices but again, the record of the Oireachtas has been
disappointing. The Health Insurance Act 1994, 10 and the Health Insurance (Miscellaneous Provisions)
Act 2009 11 make provision for prescribing information that should accompany the health insurance
contract, and health insurance advertising, but no regulations have been made under either Act.
(2) Case law
7.05 Judicial protection of proposers and insureds has been available on an ad hoc basis. In cases
where an insurer does not make use of a ―proposal form with its presumably relevant questions‖ 12 the
duty of disclosure will often be abridged or the duty to make full disclosure waived. In Manor Park
Homebuilders Ltd v AIG Europe Ireland Ltd 13 the failure of the insurer to make reasonable inquiries, issue
appropriate documentation at the pre-contract stage were held to fall short of the good faith obligations
resting upon the reasonably prudent insurer and ―in breach of its duty of uberrimae fidei in failing to
adequately inform itself of the facts and in failing, for improper reasons, to deal fairly with the insured or
consider his interests‖. 14 In the context of this more proactive view of what the insurer must do in order to
keep up the insurer‘s end of the utmost good faith principle, the transfer of information is not asymmetrical
at all. It follows that, if an insurer‘s right to avoid a policy for misrepresentation or non-disclosure can be
lost because of shoddy infomation gathering practices, the insurer has as much to lose by breaching this
good faith principle as does the proposer. In this context, legal rules to regulate information transfers and
secure compliance with requirements of form should be mutually beneficial to proposer and insurer.
(3) Self Regulation and Formalities
7.06 The insurance industry recognises the importance of good information gathering practices and
using documents to communicate with consumers. Both the IIF Code of Practice on Life Assurance–Duty
of Disclosure, and the Code of Practice on Non Life Insurance set out a limited number of obligations that
are relevant. These include a requirement to advise proposers of the consequences of failure to disclose
all material circumstances, to be included in the declaration or prominently displayed elsewhere. Also,
matters which insurers have commonly found to be material should, insofar as practicable, be the subject
of clear questions in proposal forms. These Codes do not however provide any guidance on the
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Miles v New Zealand Alford Estate Co. (1886) 32 Ch. 266
On contracts of surety and indemnity see Corbin, ―Contracts of Indemnity and the Statute of Frauds” 41 Harv.
L.R. 689 (1941). There is a conceptual difficulty raised by contracts of guarantee – see ICB plc v Insurance
Corporation of Ireland [1991] ILRM 726.
Section 2 of the Statute of Frauds Ireland 1695 remains in respect of contracts not to be performed within one
year and contracts of guarantee – for land contracts see now section 51 of the Land and Conveyancing Law
Reform Act 2009 and Schedule 2 thereof.
Hochbaum v Pioneer Insurance Co [1933] 1 WWR 403; Gayditch v Mutual Benefit Health and Accident
Insurance [1940] 4 DLR 236; Gillies v Brown (1961) 53 SCR 557.
Section 13.
Section 11.
Per McCarthy J. in Aro Road & Land Vehicle v ICI [1986] IR 403.
[2008] 2 ILRM 190.
Per McMahon J, at p.216.
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