Insurance Contracts CP - Law Reform Commission

in Coleman accords with data protection law, there are other situations where the ‗disconnects‘ between
privacy considerations and contract law are more evident.
1.14 Take the possible dilemma facing Mrs Lambert in the English case Lambert v Co-operative
Insurance 8 . While on the facts of Lambert the issue of disclosure did not arise because Mrs Lambert did
not consider it relevant, the point is this: should the disclosure be made, even if the personal data relates
to a third party? Data protection law, especially rules 1 to 4, are probably relevant but, at an intuitive
level, one could be excused for seeing the privacy consideration as being somewhat artificial.
Nevertheless, it is possible to envisage cases where a previous conviction would not be disclosed, on
privacy grounds, the effect being that the insurance policy might be avoided. While a Spent Convcitions
Act 9 might answer this situation, the same may not be true of other sensitive personal data material such
as health conditions or sexual history. The leading English decision on this is undoubtedly Horne v
Poland, 10 in which an insurer was able to avoid payment on a burglary insurance policy on the basis that
the proposer had failed to declare that he was born in Romania and had lived there until his teens,
matters of importance to an underwriter assessing risk apparently.
1.15 The decisions of the Data Protection Commissioner also demonstrate how the data protection
principles may cut across insurance contract law. Case Study 2 of 1999 for example 11 illustrates the fact
that breach of any implied contractual duty of confidence in relation to personal data will also constitute a
breach of the security principle (rule 4 above). Case Study 1 of 2001 also censored an insurer that
collected irrelevant data on the marital status of a person seeking motor insurance, 12 and Case Study 8 of
2009 also drew attention to an insurer collating excessive information on penalty points imposed on
drivers. There are also situations where the sharing of personal data with trade bodies or other insurers
may be problematical. Such practices were held by the Data Protection Commissioner, in a decision
relating to disclosure to the Insurance Industry Federation (IIF) of personal data on health insurance
applicants, to be understandable from the insurer‘s perspective, but the Commissioner felt that ―explicit
consent‖ to disclosure of medical data should be the necessary standard, albeit at the cost of having any
proposal declined or the contract avoided, should the proposer fail to make the disclosure. 13
1.16 These matters have led the Data Protection Commissioner, in consultation with the insurance
industry, to formulate the Code of Practice on Data Protection for the Insurance Sector. Many of the
requirements set by the code have a direct impact on data capture requirements and recalibrate the
existing balance vis-à-vis the duty of disclosure, for example, further undermining the notion that the onus
lies upon the proposer to volunteer information unprompted by the insurer.
1.17 The fair obtaining and processing principle (rule 1) is said to require the insurer, on an
application form, to, inter alia, advise the ―applicant‖ about the purpose of collecting the data, to whom it
may be disclosed and any other relevant information necessary to ensure that all processing meets the
requirements of fair processing. This obligation is reinforced by a requirement that insurers have a
written privacy policy ―setting out clearly for what purposes personal data is processed‖, a privacy
statement also being required for any insurer website. Rule 1 also has further implications should an
insurance company as a matter of course seek personal data about an applicant from a third party, such
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[1975] 2 Lloyd‘s Rep. 485. In this case, the Court of Appeal ―reluctantly‖ held in favour of the insurer in the
context of an policy for ―all risks,‖ because the proposer failed to reveal that her husband had been convicted
of receiving stolen goods (McKenna J noting at p.191 that ―[s]he is not an underwriter‖).
See Law Reform Commission, Report on Spent Convictions (LRC 84-2007). The Government Legislaton
Programme, Autumn Session 2011 (September 2011), available at www.taoiseach.ie, proposes to publish a
Spent Convictions Bill in 2012. The issue is discussed further below.
[1922] KB 364.
Case studies are found in the Annual Reports of the Data Protection Commissioner and can be found also at
www.dataprivacy.ie.
But see Dunn v Ocean Accident and Guarantee Corporation (1933) 45 Lloyd‘s Rep 276 where concealment of
marital status was deemed concealment of a material fact.
Case Study 13/2006.
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