Insurance Contracts CP - Law Reform Commission

functions may in the future be merged into a new body incorporating the Competition Authority) will have
a significant role to play in the resolution of consumer insurance complaints relating to general practices
within the insurance industry. Recital 9 of the 2005 Directive provides that the directive is ―without
prejudice to Community and national rules on contract law... [f]inancial services and immovable property,
by reason of their complexity and inherent serious risks, necessitate detailed requirements, including
positive obligations on traders. For this reason, in the field of financial services and immovable property,
this directive is without prejudice to the right of Member States to go beyond its provisions to protect the
economic interests of consumers‖. Article 3(9) of the Directive allows Member States to impose
requirements that are either more restrictive or prescriptive than those found in the directive. The
financial services that were brought within the remit of the Consumer Protection Act 2007 include services
or facilities for insurance, and the 2007 Act goes on to prohibit unfair commercial practices, misleading
commercial practices and aggressive commercial practices that are prejudicial to consumers.
(6) Financial Services and consumers
1.23 In introducing to the Oireachtas what became the Consumer Protection Act 2007 the then
Minister for Enterprise, Trade and Employment said that its provisions ―add to all sectors of the economy
and offer protection to consumers whether they are buying a loaf of bread or taking out a mortgage with
the local bank‖. 19 As the Act went through the Oireachtas it was the subject of amendments to ensure
that the jurisdiction to investigate complaints was vested in the Consumer Director of the Financial
Services Authority, this being transferred to the Financial Services Ombudsman at a later date. Periodic
reviews and investigations by the Financial Regulator into sectors of the insurance industry were seen as
an important part of the role of the Financial Regulator as a consumer advocate. In June 2010
investigations into home insurance centred on a few failures to process claim cheques within 10 business
days. The Financial Regulator also questioned an increasingly standard practice whereby home
insurance providers resort to using an ―approved builder‖ panel to effect home repairs. Both the Financial
Regulator and the Consumers Association of Ireland questioned this practice vis-à-vis compliance with
the Financial Regulator‘s 2006 Consumer Protection Code (since superceded by the Consumer
Protection Code 2012), transparency requirements and competition law. Problems identified in relation
to motor insurance included failures in relation to the statutory renewal timelines and inadequacy of
renewal documentation.
1.24 The Central Bank Reform Act 2010 has vested responsibility for banking and financial services
regulation in the Central Bank of Ireland. The Central Bank thus replaces the three previous statutory
agencies, the Central Bank, the Financial Services Authority of Ireland and the Financial Regulator. The
directorate within the Central Bank of Ireland responsible for Financial Regulation has oversight over six
divisions, two of them being insurance supervision and consumer protection. In 2011, the Consumer
Protection Division released the findings of a Complaints Handling Inspection in Insurance Firms. 20 The
inspection matched up the Consumer Protection Code and compliance levels attained within twelve
insurance providers. Despite the prescriptive nature of the Code, high levels of non-compliance were
found in regard to provision of initial point of contract data to the consumer, information on the Financial
Services Ombudsman and rules requiring the acknowledgement of a complaint, in writing within five days
of receipt of the complaint.
(7) The Jurisdiction of the Financial Services Ombudsman
1.25 The non-statutory Insurance Ombudsman of Ireland ADR Scheme, operative between 1992
and 2004, was confined to complaints in which the proposer/insured acted ―in a private and personal
capacity only‖. While the initial definition of ―consumer‖ in the Central Bank and Financial Services
Authority of Ireland Act 2004 identified a consumer as a natural person not acting in the course of, or in
connection with, carrying a business, the 2004 Act contained an enabling provision allowing the Financial
Services Ombudsman Council to prescribe persons, or groups of persons to be designated as
19
20
632 Dáil Debates Col. 1272. Note Professor Craig Brown‘s observation that ―in a sense all insurance law is
about consumer protection‖, in Brown ―Private Insurance and Public Policy: Reconciling Conflicting Principles‖
(2009) 47 CJBL 267 at 275
Published on 19 April 2011.
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