Insurance Contracts CP - Law Reform Commission

11.09 The Commission invites submissions as to whether, in connection with life insurance, the
following should also be deemed to have an insurable interest in the life policy: (a) a grandparent in
relation to his or her grandchild; and (b) siblings in relation to each other. [Paragraph 2.98]
Chapter 3 – Duty of Disclosure
11.10 The Commission provisionally recommends that the pre-contractual duty of disclosure in
insurance contract law should be retained, but that it should (in accordance with authoritative case law in
Ireland) be restricted to facts or circumstances of which the person applying for insurance cover – the
proposer – has actual knowledge; and that the duty of disclosure would not, therefore, extend to every
fact or circumstance which ought to be known by him or her (constructive knowledge). The Commission
provisionally recommends that this modified pre-contractual duty of disclosure should apply to all
insurance, other than Marine, Aviation and Transport (MAT) insurance, which would continue to be
regulated in this respect by the Marine Insurance Act 1906. [Paragraph 3.22]
11.11 The Commission provisionally recommends that legislation should continue to provide that,
because the proposer possesses more relevant information than the insurer, the pre-contactual duty of
disclosure should continue to be the basis on which a contract of insurance is a contract of utmost good
faith. [Paragraph 3.27]
11.12 The Commission provisionally recommends that legislation should provide that, in respect of all
contracts of insurance, an insurer shall not be permitted to repudiate liability on the basis of nondisclosure
of material facts of which the insured could not reasonably be expected to have had actual
knowledge at the time of applying for cover. [Paragraph 3.28]
11.13 The Commission proviaionally recommends that an insurer should be required to show that
non-disclosure of a material fact played a part in the insurer‘s decision to enter the contract. [Paragraph
3.33]
11.14 The Commission invites submissions as to which of the following two definitions of ―material
facts‖ should be provided for in legislation: either (a) facts which, in the circumstances, a reasonable
insured would know to be highly relevant and should be disclosed; or (b) facts which, in the
circumstances, a reasonable insured would know to have a decisive influence on the insurer‘s decision in
accepting the risk or in setting the level of the premium (the price). [Paragraph 3.37]
11.15 The Commission provisionally recommends that the insurer should be under a statutory duty to
explain to a proposer both the nature of the duty of disclosure and the consequences of non-disclosure.
[Paragraph 3.103]
Chapter 4 – Pre-contractual Misrepresentation and Insurance Contracts
11.16 The Commission provisionally recommends that legislation should provide that the insurer shall
ensure that any question posed in writing to the proposer is drafted in plain, intelligible language; that any
such question should be specific as to the information being sought by the insurer; and that where there
is doubt about the meaning of a question, it should be interpreted by reference to a standard of what is
fair and reasonable. [Paragraph 4.14]
11.17 The Commission provisionally recommends that if an insurer does not follow up on the failure
by the proposer to answer a question, or in respect of an obviously incomplete answer, this should be
regarded as a waiver by the insurer of the duty of disclosure and the duty to answer questions honestly
and carefully; this would not apply where there has been fraudulent concealment by the proposer
(intentional or reckless concealment). [Paragraph 4.23]
11.18 The Commission invites submissions as to whether the existing duty of disclosure and/or rules
on misrepresentation, intended by insurers to identify the moral hazard that an underwriter may be facing,
need to be reconsidered; and in particular, in relation to convicted persons, whether there are
circumstances where a conviction (other than for insurance fraud) should be exempt from the duty to
disclose or the duty to answer questions carefully and truthfully. [Paragraph 4.26]
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