Insurance Contracts CP - Law Reform Commission

(pre-existing medical condition). 25 The Insurance Ombudsman held not. In another case, she dealt with
a case in which a prison officer died after he suffered a heart attack while restraining a prisoner. Prior to
taking out a life policy, and while attending the family GP in regard to treatment of his children, he
mentioned one episode of chest pain. The doctor prescribed aspirin and told him to return for an
examination which he did not do. While the Insurance Ombudsman felt that this episode of chest pain
was a material fact she recommended a proportionate settlement of 50% be made. The Ombudsman‘s
observations are of interest even though the Commission considers that, in terms of the law, the
insurance company acted reasonably; even under the Commission‘s proposals in relation to reform of
misrepresentation, the company would be entitled to refuse to meet the claim if the company could show
it would have declined the proposal. The Insurance Ombudsman stated:
―On the one hand, the Company‘s position can be appreciated. There is no doubt that a life
assurance underwriter would be interested in the episode of chest pain and that it is, therefore,
a material fact. If made aware of it a prudent underwriter would have required it to be
investigated before offering assurance.
From the layman‘s point of view it is understandable that a person might close his mind to such
an episode and in the absence of renewed symptoms take no further action. Whether there
was only one instance of chest pain and whether the matter had completely left the life
assured‘s mind by the time the application form was being completed is not possible to know.
There is always difficulty where there has been no medical diagnosis. No illness was
diagnosed in this case by the deceased‘s GP. In our day to day lives wehave many symptoms
and only in a minority of instances do we consult a doctor. Occasionally, as it transpired in this
case, the symptoms were an indication of a sinister underlying condition.
Do I, therefore, concede that the Company are legally correct and support their repudiation or
do I acknowledge that the life assured had erased the matter from his mind and being human
did not disclose the ―casual‖ consultation with his doctor.
It was not for me to attempt to retrospectively underwrite this Policy but at the same time, in my
view, further investigation would have led to assurance being offered, but at an increased
premium.‖ 26
3.20 Indeed, the duty of disclosure is capable of producing some singular situations, none more so
than the dispute between Frank Godfrey and Lloyd‘s of London. An exterior wall of Mr Godfrey‘s cottage
in County Meath had a mural of the 1690 Battle of the Boyne painted on it for over 25 years but, ironically,
the Peace Process led to its apparent destruction by arsonists only days after the then Taoiseach and
then Northern Ireland First Minister had launched an official tourism centre nearby in April 2008. Lloyd‘s
of London declined to honour the fire insurance policy taken out by Mr Godfrey on the basis that he had
not disclosed the existence of the mural. 27 In 2009 the Financial Services Ombudsman found against Mr
Godfrey, ruling ―that by virtue of the nature of the subject, [the mural] would have been the source of
some provocation, albeit to a limited number of intolerant individuals.‖ Press reportsindicated that, while
an appeal to the High Court, may be under consideration, a separate fund-raising campaign led to the
mural being re-painted. 28
3.21 The Commission considers that the duty to volunteer information can only be seen in the
context of the Commission‘s provisional recommendations on the insurer‘s duty to seek information from
proposers in the shape of precise questions being put to a proposer 29 . The IIF Code of Practice on Non
Life Insurance states that insurers ―should avoid asking questions which would require knowledge beyond
25
26
27
28
29
Case study 26 of 2000. .
Case study 10, 1999.
See ―Insurance Company refuses payout for Battle of the Boyne Cottage‖, Daily Telegraph 23 June 2010.
See ―Drive to rebuild burned-out ‗Boyne‘ Cottage after insurance claim‖, Irish Times 2 February 2010 and
―Mural on cottage ‗will be repainted‘‖, Irish Independent 1 September 2010.
Para. 4.14 below
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