Insurance Contracts CP - Law Reform Commission

has been the Consumer Protection Code 2012, 14 which sets out enforceable standards for financial
services contracts, including insurance contracts, and which in many respects amount to a statutory
statement of key contractual obligations. Along with these statutory innovations, voluntary Codes of
Practice have also been developed by representative bodies suich as the Irish Insurance Federation (IIF),
and the Commission considers that these have further potential.
10. The establishment, in parallel, of the FSO has had equally signficant effects, because the FSO
has considerable decision-making powers to resolve consumer disputes as well as those involving small
and medium sized undertakings (SMEs). The establishment of the FSO indicated the need for a
decision-making process to resolve disputes that would be less expensive than litigation. The FSO has
the additional advantage that the Office can engage in mediation of disputes and, even when engaged in
decision-making, can make determinations that depart from the precise requirements of the principles
and rules of individual insurance contact law. This statutory discretion appears to reflect the view that
these principles and rules may not reflect an appropriate calibration between the respective obligations
and rights of the insured and the insurer. The Commission notes, nonetheless, that the published
decisions of the FSO indicate that, in many instances, the existing principles and rules have played a
significant part in these processes.
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The development of Principles of European Insurance Contract Law (PEICL)
11. Another significant influence, certainly in terms of individual insurance contract law, has been the
publication of the Principles of European Insurance Contract Law (PEICL), the outcome of a collaborative
project between leading European experts in this area. The publication of PEICL mirrors comparable
projects in other jurisdictions to set out key principles of the law, such as the Restatements of Law
published by the American Law Institute (ALI). It remains to be seen whether the PEICL will have
anything like the same influence on the development of law in EU member states as the ALI
Restatements have had in the United States. In any event, from the Commission‘s perspective, the
publication of PEICL provides another reference point for this current review of insurance contract law.
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The Commission’s General Approach in this Consultation Paper
12. The Commission considers that a review of insurance contract law in the early 21 st century
should have regard to all these developments. This allows the Commission to consider afresh longestablished
principles and rules in this area, in particular those based on principles of private autonomy
and which were developed before the advent of statutory regulation. The regulatory landscape,
evidenced by the Consumer Protection Code 2012, has a much more interventionist character in relation
to contractual practices than was previously the case, or perhaps is even generally appreciated.
Furthermore, the advent of the FSO has produced a body of norms and standards that indicate the need
for a fundamental reappraisal of Irish insurance contract law.
13. In approaching this Consultation Paper, therefore, the Commission considers that while existing
common law principles and rules may be in some need of recalibrtation, a number of underlying key
elements remain valid. The Commission is conscious that the existing law in this area includes longestablished
common law principles whose origins coincide with the still-extant Life Assurance Act 1774.
It is equally conscious that the more recent case law in this area, and the recent legislation that
established the Financial Regulator and the FSO, provide an important contemporary background against
which propsoals for reform need to be considered. The Commission is also conscious that any proposals
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The Consumer Protection Code 2012 (which was published in October 2011 after a significant public
consultation process and is in force from 1 January 2012) is more detailed than the previous Consumer
Protection Code published in 2006. This reflects the more robust ―principles and rules‖ approach to regulation
mentioned in the previous footnote. The Code was issued under the following statutory powers: (a) section
117 of the Central Bank Act 1989; (b) sections 23 and 37 of the Investment Intermediaries Act 1995; (c)
section 8H of the Consumer Credit Act 1995; and (d) section 61 of the Insurance Act 1989. The Consumer
Protection Code 2012 is available at http://www.centralbank.ie/regulation/processes/consumer-protectioncode/Documents/Consumer%20Protection%20Code%202012.pdf.
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