Insurance Contracts CP - Law Reform Commission

Insurance in the UK, Ireland and EU also suggest that a test less onerous than possession of a legal
interest or equitable represents Irish law. Some awareness of the need to liberalise the law is found in
the wider literature. The 1976 O‘Donoghue Report 91 commented on the need to extend insurable interest
so as to cover instances of adoption and give the trustees of trust funds a right to insure where it would
be commercially prudent to do so, but the O‘Donoghue Report did not give a view on the relevant test.
Ellis, in Modern Irish Commercial and Consumer Law 92 suggests a working definition of insurable interest,
fusing this definition from a combination of the outcome in the Carrigan case and the views of Wilson J in
Kosmapoulos:
―insurable interest can be said to arise when a person stands in such relationship to the subject
matter of the insurance that:
(1) he benefits by its continued safety (or absence from liability in the case of liability
insurance); or
(2) is prejudiced by its loss (or incurring of a legal liability).
In short, to possess insurable interest, a person must have some financial involvement with the
subject-matter of the insurance.‖
2.56 It is arguable that as the Life Assurance Act 1774 does not apply to fire insurance for
buildings, 93 nor in relation to goods, 94 the most important question to be addressed in Ireland relates not
to the test to be applied but whether the insurable interest requirement in life policies needs to be
repealed or reformed.
2.57 It is clear that Irish courts give unmeritorious insurable interest arguments short shrift.
Dissatisfaction has also been shown by non-judicial decision makers. The insurable interest issue arose
on several occasions in relation to the question whether the non-statutory Insurance Ombudsman of
Ireland could take jurisdiction over complaints made by employees arising out of disability claims arising
out of group schemes. The Insurance Ombudsman found that an interest could be established when the
complainant was required to pay the premium and initiate the claim, 95 or when the group scheme itself
had been negotiated between the employer and a representative trade union. 96 Even in the case of a
non-contributory group scheme the Insurance Ombudsman ruled that jurisdiction existed if the
complainant could be regarded as an individual member; 97 change of position on the basis of assurances
given also had the same effect. 98 However, where a life assurance policy that had been taken out by the
proposer, the complainant‘s (now) estranged husband, the complainant being the life assured and
responsible for paying the premiums, the Ombudsman indicated that she had no power to order the
insurer to effect a transfer of title from the proposer to the complainant. 99
90
91
92
93
94
95
96
97
98
99
Buckley, Insurance Law 2nd ed (Round Hall 2008), at 36.
See the Final Report of the Committee of Inquiry into the Insurance Industry Prl.5530 (March 1976).
Ellis, Modern Irish Commercial and Consumer Law (Jordan‘s 2004), at para. 29.25.
Church and General Insurance Co v Connolly High Court 7 May 1981.
Motor Insurer‟s Bureau of Ireland v PMPA Insurance Ltd [1981] IR 142.
Case 3, Digest 1992-1988.
Case 6, Digest 1992-1998.
Case 4, Digest 1992-1998.
Case 5, Digest 1992-1998. In Case 6 the Insurance Ombudsman said the question whether an employee had
an interest in the policy, ―either directly or beneficially‖, it was necessary to consider both the spirit and the
wording of the policy and to deduce the objective and aims of the parties in effecting the insurance.
Case 8, Digest 1992-1998.
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