Insurance Contracts CP - Law Reform Commission

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Ireland Ltd Pg No. Roselodge Ltd v Castle [1966] 2 Lloyd's Rep 113 UK 61 Ross v Bradshaw (1761) 1 Wm.Bl 312 Eng 68 Ryanair Ltd v Billigfluege.de GmbH [2010] IEHC 18 Irl 132 Schoolman v Hall [1951] 1 Lloyd's Rep 139 UK 65 Scott v Wawanesa Mutual Insurance Co Sharon‘s Bakery (Europe) Ltd v Axa Insurance UK plc Sharp v Sphere Drake Insurance Ltd Sirius International Insurance Corp v Oriental Insurance Corp [1989] 1 SCR 1445 Can 169 [2011] EWHC 210 (Comm) UK 65 [1992] 2 Lloyd's Rep 501 UK 30 [1999] 1 All ER (Comm) 699 UK 84 The Mercandian Continent [2001] EWCA Civ 1275 UK 163 US Trading Ltd v AXA Insurance Co Ltd Wall and Wall v The New Ireland Assurance Co. Widefree Ltd v Brit Insurance Ltd Zeller v British Caymanian Insurance Co plc [2010] Lloyd's Rep 505 UK 132 [1965] IR 386 Irl 50 [2009] Lloyd's Rep 505 UK 132 [2008] UKPC 4 UK 110 xx
1 INTRODUCTION A Background: Insurance Contract Law 1. This Consultation Paper forms part of the Commission‘s Third Programme of Law Reform 2008- 14 1 and involves an examination of insurance contract law. In the Consultation Paper, the Commission examines the following principles and rules concerning insurance contracts: the concept of ―insurable interest,‖ the duty of disclosure placed on the insured; the nature and scope of pre-contractual misrepresentation by the insured; the nature and effect of ―warranties‖ in insurance contracts, and their connection with ―basis of contract‖ clauses; the relationship between exclusions in insurance contracts and the general law on unfair contract terms; formalities (including specific terms that need to be drawn to the insured‘s attention); the duty of utmost good faith (uberrimae fidei) in insurance contract law; the rights of third parties; and remedies available for breach of the contract (including the scope of repudiation of the contract and monetary compensation). The Consultation Paper examines whether these principles and rules would benefit from statutory consolidation. B Insurance Contract Law: Some Key Common Law Principles 2. Insurance contract law in Ireland has not, until now, been the subject of any systematic review since the foundation of the State in 1922. As the discussion in this Consultation Paper makes clear, some of the key features of insurance contract law (in common with those of contract law in general) derive from long-established principles and rules of common law (judge-made law). This includes the important principle (which the courts in Ireland continue to affirm) that, at the pre-contractual formation of the insurance contract, there is a duty on the person taking out the policy of insurance (the proposer) to disclose material information that is relevant to the risk that the insurer is being asked to take on. The Irish judiciary have also been careful to point out that the common law imposes more obligations on the insurer than is commonly believed to be the case. Indeed, at the heart of any discussion on insurance contract law is the nature and extent of the obligation on both parties to act with utmost good faith, the concept of uberrimae fidei. C Insurance Contract Law: pre-1922 Legislation 3. In addition to important common law rules of insurance contract law, in 1922 the State carried over a large body of pre-1922 insurance legislation, beginning with the Life Assurance Act 1774. The antiquity of the 1774 Act has created difficult issues of interpretation, 2 and even relatively modern legislation such as the Marine Insurance Act 1906 has been criticised as producing a legal context ―so wholly inappropriate, in part at least, to the purpose of the transaction being effected.‖ 3 Nonetheless, Irish courts have, in general, 4 agreed with the view that the Marine Insurance Act 1906 is, in general, a codification of the common law rules on insurance that apply ―across the board‖. As the 1906 Act remains in force it has, by default, coloured the way in which even consumer insurance transactions are to be tested. As the Commission argues throughout the Consultation Paper, this approach requires reappraisal in the context of reform of insurance contract law, in particular bearing in mind the increased level of regulatory supervision that was enacted in the 20 th Century and has accelerated in the 21 st Century, including the influence of EU law. 1 2 3 4 Report on Third Programme of Law Reform 2008-2014 (LRC 86-2007), Project 34. See Church and General Insurance Co v Connolly, High Court, 7 May 1981. Finlay CJ in Brady v Irish National Insurance Co Ltd [1986] ILRM 669, at 679. In Brady v Irish National Insurance Co Ltd [1986] IRLM 669, at 679 the Supreme Court assumed ―without deciding‖ that the 1906 Act applied to a policy relating to pleasure craft used exclusively on inland waters. 1
Page 1 and 2: CONSULTATION PAPER INSURANCE CONTRA
Page 3 and 4: MEMBERSHIP The Law Reform Commissio
Page 5 and 6: ADMINISTRATION STAFF Head of Admini
Page 7 and 8: ACKNOWLEDGEMENTS The Commission wou
Page 9 and 10: TABLE OF CONTENTS Table of Key Legi
Page 11 and 12: CHAPTER 4 (3) Factors covered by an
Page 13 and 14: (10)Enforcement 149 CHAPTER 7 FORMA
Page 15: TABLE OF KEY LEGISLATION Assurance
Page 18 and 19: Pg No. Economides v Commercial Unio
Page 22 and 23: D Regulation and Supervision of Ins
Page 24 and 25: has been the Consumer Protection Co
Page 26 and 27: this definition would apply both to
Page 28 and 29: Commission provisionally recommends
Page 30 and 31: 2005 Final Report and Recommendatio
Page 32 and 33: in Coleman accords with data protec
Page 34 and 35: functions may in the future be merg
Page 36 and 37: estrictions on the ability of the O
Page 38 and 39: (2) Adverse comments on the propose
Page 40 and 41: harmonisation of insurance contract
Page 42 and 43: 1.49 Before leaving the general iss
Page 44 and 45: (2) Decisions of the Financial Serv
Page 46 and 47: uberrima fidei, regulatory requirem
Page 48 and 49: 1.68 The Commission provisionally r
Page 50 and 51: 2.03 In contrast, a non-indemnity
Page 52 and 53: CJ expressed the view that it made
Page 54 and 55: 2.18 In the House of Lords, Lord El
Page 56 and 57: Lord Eldon formulation, 45 overrule
Page 58 and 59: interest in respect of the property
Page 60 and 61: drawings themselves, Auld LJ and Si
Page 62 and 63: the judges to complicate the law by
Page 64 and 65: Insurance in the UK, Ireland and EU
Page 66 and 67: any existing doubt, or prevailing m
Page 68 and 69: (2) A potential financial loss reco
Page 70 and 71:
to the extent of monies actually ex
Page 72 and 73:
took out a life insurance policy on
Page 74 and 75:
2.86 The Commission invites submiss
Page 76 and 77:
and social provision be integrated
Page 78 and 79:
and deny enforceability. The leadin
Page 80 and 81:
(6) Defining Insurance Contracts in
Page 83 and 84:
3 CHAPTER 3 DUTY OF DISCLOSURE A In
Page 85 and 86:
the Ohio case of Hartford Protectio
Page 87 and 88:
the basis that the insurance contra
Page 89 and 90:
that which the signatory could reas
Page 91 and 92:
―(i) In order to be entitled to a
Page 93 and 94:
withholding information on the basi
Page 95 and 96:
public interest in running blockade
Page 97 and 98:
In Manor Park, McMahon J. took a si
Page 99 and 100:
at the precontractual stage. The de
Page 101 and 102:
decisions in which the Ombudsman ha
Page 103 and 104:
(8) The English Law Commission’s
Page 105 and 106:
(10) Australia 3.88 In ALRC Report
Page 107 and 108:
Article 3:103 Exceptions The sancti
Page 109:
it is desirable to retain the duty;
Page 112 and 113:
B Judicial approaches to limiting a
Page 114 and 115:
will no doubt arise in the future.
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questions that are incapable of a y
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(1) Marine Insurance Act 1906 and m
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(3) Should the right to rescind be
Page 122 and 123:
y English judges to any extent, and
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non-disclosure or misrepresentation
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Factually incorrect answers to a qu
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4.68 While the English and Scottish
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terms to be construed by reference
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conclusion, ―with considerable re
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the present was held not to be prom
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(10) Limiting the scope of the warr
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have been forthright in suggesting
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nature and potentially draconian na
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(b) that even though the loss was o
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whichever is the earlier event. 103
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5.67 Nevertheless, the law reports
Page 148 and 149:
may properly consider to be relevan
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―It is easy to sympathise with th
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decisions, and case-law, that preve
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the terms of the insurance contract
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householder each assuming the other
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whether in all the circumstances it
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may be regarded as technical or unm
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―Basis of contract clauses would
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The court may be influenced by the
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―consumer‘s reasonable expectat
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of the term, particularly in the co
Page 170 and 171:
National Consumer Agency would be t
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premium, thus taking the contract o
Page 174 and 175:
the Provider could not provide the
Page 176 and 177:
exceptions to these requirements in
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(l) the existence of guarantee fund
Page 180 and 181:
policy should be issued within fift
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contains interesting and helpful ad
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in the Aro Road case who wrote that
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8.11 The most visible demonstration
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common law position relating to sep
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F Effects of fraud 8.27 Once the fr
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8.36 In the case of composite insur
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(i) consented to the act or omissio
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Insurance Corporation of the Channe
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not only an economic purpose, but a
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Article 6:104 Time of Performance (
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B The Problem in Context 9.04 The d
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D Exceptions to the Privity Rule (1
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9.20 Because Ireland has not adopte
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cover but the defendants failed to
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(1) ―Where a person who is not pa
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9.46 The privity doctrine confines
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CHAPTER 10 REMEDIES A Introduction
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(4) Where the risk would have been
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isks‖ policy provided by Royal an
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elation to negligent misrepresentat
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insurer is seeking to avoid the con
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10.38 The decision of Hirst J in Th
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10.48 The Ontario Court of Appeal,
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(a) An insurer cancelled a motor in
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G Subrogation - Public Policy Excep
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(ii) Subrogation - Employee Liabili
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Employee‟s Liability (Indemnifica
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―an employer should be liable to
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Street Dublin against the embezzlem
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11.09 The Commission invites submis
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of a promissory warranty, it should
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