Insurance Contracts CP - Law Reform Commission

3.12 On the question of whether the proposer is to be fixed with constructive knowledge of facts that
the proposer ought to have discovered had he or she undertaken reasonable inquiries, section 18(1) of
the Act is generally regarded as providing a specific rule for business insurance, the section directs that
―the assured is deemed to know every circumstance which, in the ordinary course of business, ought to
be known by him‖.
3.13 In cases of health insurance and similar insurance areas Irish case-law suggests that a
distinction is to be drawn between cases where the proposer honestly believes that a symptom, medical
episode, or medical condition has, or will have, no serious or long lasting consequences, from situations
where the proposer simply is unaware of the medical condition. In this first situation, cases such as
Curran v Norwich Union Life Insurance Society 14 suggest that if the symptoms being experienced by
individuals have alerted a medical practitioner to prescribe medication, for example, this would be enough
to trigger a duty of disclosure, even if the patient does not believe the suspected illness is likely to
manifest itself or develop into a serious medical condition. In contrast, the fact that the individual is not
made aware of the prognosis will not constitute non-disclosure: Coleman v New Ireland Assurance plc. 15
In the decision of the Supreme Court, in a leading life insurance case, Keating v New Ireland Assurance
Company 16 a policy of life insurance was executed in June 1985. At a medical examination that took
place prior to the policy being concluded the life in question disclosed that he had received treatment for a
gastric disorder two months previously and the he had been prescribed medication. The life in question
did not know what his underlying condition was and that the medication was used in treating angina
pectoris, not a gastric disorder. The condition led to the death of the individual some five months later.
The insurer declined to pay up on the policy on the grounds of non-disclosure, the argument centring on
the fact that in undergoing tests investigating the gastric disorder, an angiogram and ECG test were
undertaken. McCarthy J observed that while the doctors treating the patient were aware of his heart
condition, the patient was not:
―The insurers were not informed of these material facts; was it a non-disclosure? One cannot
disclose what one does not know, albeit that this puts a premium on ignorance. It may well be
that wilful ignorance would raise significant other issues; such is not the case here. If the
proposer for life insurance has answered all the questions asked to the best of his ability and
truthfully, his next-of-kin are not to be damnified because of his ignorance or obtuseness which
may be sometimes due to a mental block on matters affecting one‘s health.‖ 17
3.14 In Aro Road and Land Vehicles Ltd v Insurance Corporation of Ireland 18 McCarthy J also
limited the duty of disclosure by reference to the underlying good faith standard. In this case the proposer
failed to disclose criminal convictions that had been secured against him some 19 years previously, the
insurance being property insurance obtained over the telephone, in circumstances of some urgency,
without detailed questioning of the proposer or the use of a proposal form. After invoking the utmost good
faith standard McCarthy J asked:
―how does one depart from such a standard if reasonably and genuinely one does not consider
some fact material; how much the less does one depart from such a standard when the failure
to disclose is entirely due to a failure of recollection? Where there is no spur to the memory,
where there is no proposal form with its presumably relevant questions, how can a failure of
recollection lessen the quality of good faith?‖ 19
3.15 McCarthy J also seems to have considered the underwriter to have forfeited the right to insist
upon full disclosure in circumstances where the proposer is not questioned about a particular matter, on
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[1987] IEHC 5. See also Lindenau v Desborough (1828) 8 B&C.586.
[2009] IEHC 273. See also Zeller v British Companion Insurance Co [2008] UKPC 4.
[1990] 2 IR 383.
Ibid at 392.
[1986] IR 403.
Ibid at 414.
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