Insurance Contracts CP - Law Reform Commission

In Manor Park, McMahon J. took a similar approach, indicating that because the insurer issued the policy
for its own reasons (to maintain a good relationship with the proposer‘s broker) while failing to issue
appropriate documentation and carry out inspections of the property, the insurer was in breach of it‘s duty
―of uberrimae fidei in failing to adequately inform itself of the facts and in failing, for improper
reasons, to deal fairly with the insured or consider his interests.‖ 78
3.52 In cases where a proposal form is used, even McCarthy J in Aro Road conceded that the
Chariot Inns approach to the duty of disclosure may still hold sway. The failure to ask a question directed
at a particular subject or risk does not amount to a waiver (Roselodge Ltd v Castle 79 ) but it is possible that
questions posed on the proposal form may imply a waiver of the insurer‘s right to obtain information on
related matters. It all depends on the questions and context, and some questions may, in particular
instances, serve to broaden the duty by reminding the proposer of the common law duty. However, in
general, the effect of questions asked will be to limit the duty of disclosure.
―if questions asked on particular subjects and the answers to them are warranted, it may be
inferred that the insurer has waived his right to information, either on the same matters but
outside the scope of the questions, or on matters kindred to the subject-matter of the
questions. Thus, if an insurer asks, ‗How many accidents have you had in the last three
years?‘ it may well by implied that he does not want to know of accidents before that time,
though these would still be material. If an insurer asks whether individual proposers have ever
been declared bankrupt, he waives disclosure of the insolvency of companies of which they
have been directors. Whether or not such a waiver is present depends on a true construction
of the proposal form, the test being, would a reasonable man reading the proposal form be
justified in thinking that the insurer had restricted his right to receive all material information,
and consented to the omission of the particular information in issue?‖ 80
3.53 The wording of any declaration on the proposal form may be important. Kelleher v Irish Life
Insurance Co Ltd 81 demonstrates that a declaration in a proposal form, and the context in which a policy
is offered – in that case as a special promotional deal to a large group of potential customers – can lead
to a conclusion that all the insurer is concerned about will be a possibility that the proposer made a
misrepresentation. The decision of the Financial Services Ombudsman, in Case 20 of his December
2007 Summary of Complaints, illustrates that the wording of the declaration may be important. Here, a
Group Policy covering employees was held to require the policyholder to disclose the fact that a senior
employee was seriously ill. The Financial Services Ombudsman held that the questions asked had not
limited the duty of disclosure, distinguishing Aro Road and Kelleher on the facts.
3.54 In cases where the proposal form is not completed, some questions being ignored or the space
for insertion of an answer being left blank, it may be that the inference to be drawn is that a negative
answer was intended. In Roberts v Avon Insurance Co. 82 a question asking about previous losses was
not answered; the policy was avoided for fraudulent concealment on the basis that the proposer had
effectively answered that there were no previous losses. However, in general terms, if on the face of the
proposal form a question is not completed or an answer given is obviously incomplete, an insurer who
issues a policy without seeking additional information might be held to waive the requirement of full
disclosure, thus having to rely on some other basis for avoiding the policy such as fraudulent
concealment or misrepresentation. If, following discovery of the proposer‘s failure to disclose all material
facts the insurer elects to continue with the contract, the insurer will be held to have affirmed the contract.
78
79
80
81
82
[2009] 1 ILRM 190 at 216.
[1966] 2 LI LR 113.
MacGillivray, para 17-019 (footnotes omitted). See on vague questions and specific questions: Bruwer v Nova
Risk Partners Ltd 2011(1) SA 234. On SA Law generally see Van Niekerk, ―Goodbye to the Duty of
Disclosure‖ (2005) 17 SA Merc LJ. 150, 323.
[1993] ILRM 643. This view is not confined to health insurance: see FBD Insurance plc v Financial Services
Ombudsman [2011] IEHC 315 (motor insurance).
[1956] 2 Lloyd‘s Rep 240.
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