Insurance Contracts CP - Law Reform Commission

(2) Decisions of the Financial Services Ombudsman
1.53 Since 2005, the Financial Services Ombudsman has exercised the statutory jurisdiction to
adjudicate on complaints made to his Office. While the decisions handed down in this period reflect many
of the same approaches to legal issues that are evident in the adjudications of the Insurance
Ombudsman, the summaries provided by the Financial Services Ombudsman suggest a more ad hoc
approach has been taken in resolving complaints. The Financial Services Ombudsman has stressed the
duty of disclosure and the need for proposers to avoid making misrepresentations as ―fundamental
principles of insurance‖ 77 and has also found against proposers for a failure to carefully read
documentation unless mitigating factors are present. 78 The insurer who finds that his agents do not ask
for information from proposers that is sought in a proposal form may have an award made against the
insurer while being able to avoid payment of the sum insured. 79 ―Proportionality‖ awards may be given,
although such an award sometimes looks more like an award of a ―fair and reasonable‖ amount rather
than proportionality in the strict sense of being an informed decision on what the premium should have
been had the true facts been known or disclosed. 80 The decisions in Aro Road and Kelleher have been
cited and have been extended into business to business insurance providing group cover to employees 81
but those two court decisions were distinguished on the facts and a waiver of rights was held not to have
occurred. In this decision the Financial Services Ombudsman wrote that:
―All complaints received by the Ombudsman are unique and each is considered on its own
merits having regard to the particular facts of the complaint.‖
1.54 This view, which reflects the statutory basis of the Financial Services Ombudsman‘s
jurisdiction, stands in contrast to the more ‗judicial‘ approach of the first Insurance Ombudsman, Paulyn
Marrinan Quinn, who stressed a need for consistency in decision making.
(3) The failure to legislate
1.55 The 1976 Final Report of the Committee of Inquiry into the Insurance Industry 82 provided the
basis for legislative adjustments to insurance law in the form of the Insurance Act 1989. While the 1989
Act addressed many of the concerns raised by the Committee of Inquiry (eg the supervision of insurers,
payment of commissions, the regulation of intermediaries) the failure of the 1989 Act to address all of the
concerns of the Committee of Inquiry in relation to consumer protection is a matter of some regret. The
Committee pointed to a need for legislation to provide for full disclosure to be made in relation to
disclosure and warranties, but the Oireachtas was content to provide for a power to prescribe codes of
conduct. Section 61 of the 1989 Act provides:
―Where the Minister [for Finance] 83 considers it necessary in the public interest and following
consultation with the insurance industry and consumer representatives, he may by order
prescribe codes of conduct to be observed by undertakings in their dealings with proposers of
policies of insurance and policyholders renewing policies of insurance in respect of duty of
disclosure and warranties.‖
1.56 Voluntary codes of conduct evolved through an understanding reached between the
Government and the Industry and these codes have proved effective in dissuading various governments
77
78
79
80
81
82
83
December 2009 Complaints, pages 24-25; July 2009 Complaints, pages 24-26.
See June 2007 Complaints, case 11.
November 2008 Complaints, pages 13-14.
December 2008 Complaints, pages 16-17.
July to December 2007 Complaints, No. 20.
Sometimes described as the O‘Donoghue Report (Prl. 5530 published in March 1976).
When the Insurance Act 1989 was enacted, the regulation of insurance undertakings generally had been the
responsibility of the Minister for Industry and Commerce (now known as the Minister for Jobs, Enterprise and
Innovation). The functions under the 1989 Act have since been transferred to the Minister for Finance, who
also has responsibility at Government level for the regulation of other financial services undertakings.
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