Insurance Contracts CP - Law Reform Commission

names of beneficiaries into policy documentation could be left as a regulatory requirement, to be
supervised by the Central Bank of Ireland rather than allow policies to be avoided altogether.
2.67 The Commission provisionally recommends the repeal of the Life Assurance Act 1774, as
extended to Ireland by the Life Insurance (Ireland) Act 1866.
G
Should a remodelled section 1 of the Life Assurance Act 1774 be re-enacted as a
formalities provision?
2.68 While section 1 of the Life Assurance Act 1774 does not define the nature of the interest, there
are four categories that have emerged via case-law.
(1) an interest arising out of natural love and affection;
(2) an interest arising out of a potential financial loss recognised by law which existed at the
time of contracting;
(3) an interest arising out of statutory provisions;
(4) a miscellaneous category recognised by the courts.
(1) Natural Love and Affection
2.69 Natural love and affection will permit a person to insure their own life or that of their spouse.
Other family relationships that cannot satisfy factor (2) or (3) above will not involve an interest that arises
out of natural love and affection. Children and parents have no right to insure each others lives and, a
fortiori, persons related by marriage, siblings, cousins, etc do not possess an insurable interest across
such classes of relative. The most obvious instance in which this rather arbitrary position can be shown
to be socially undesirable relates to cases where a child is born who will, or may, require care at some
time in the future when the child‘s parents could then be expected to have died. Conversely, because a
child is not at any stage charged with obligations to support a parent, no insurable interest will arise if an
adult child, for example, seeks to effect insurance that will provide a financial lifeline for a parent who may
require institutional care, or nursing home accommodation at some future date. Even some attempt to
side-step the insurable interest requirement – for example, describing the policy a burial expenses policy
when the proposer was seeking to insure his mother‘s life because she was also his cook/housekeeper
will not be effective. One commentator 110 on the Law Commission‘s Insurable Interest Issues Paper has
indicated that there is scant evidence to show that dependants find it difficult to effect insurance and that
steps can be taken to avoid the 1774 Act, for example, by an assignment. These observations seem to
be beside the point. There remains the possibility that the 1774 Act will frustrate a socially desirable
objective and that avoidance techniques such as cross insurance and assignments complicate a process
that should be simple and transparent. There are cases which show that the law can be capricious in the
sense that insurable interests points may not be taken by the courts 111 or that a strict reading of the law
vis-a-vis morally unobjectionable family arrangements may lead to unacceptable results when inadequate
professional services have been rendered. 112
2.70 Cohabitees and persons engaged to be married do not possess any insurable interest in each
other‘s lives. This situation seems to the Commission to be unacceptable in the 21 st Century, and when
one considers that the insurable interest survives a decree of judicial separation or a divorce, a major
anomaly clearly exists. The difficulty of legislating clear rules in relation to non-marital relationships and
the insurable interest should not be underestimated but the law needs to be rationalised and clarified. It
may be that such difficulties make outright repeal of an insurable interest requirement the most
appropriate course of action.
110
111
112
Templeman, at 210 of Soyer, Reformine Marine and Commercial Insurance Law (Informa Law 2008).
In Re Slattery [1917] 2 IR 278.
Hayes v Allied British and Foreign Life and Fire Insurance Co (1881) 8 LR(Ir) 149. See also on assignment In
Re Power (1882) 11 LR (Ir) 93 and In Re Malet‟s Trusts (1886) 17 LR (Ir) 424.
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