Insurance Contracts CP - Law Reform Commission

at the precontractual stage. The decisions of the Insurance Ombudsman, under the Insurance
Ombudsman of Ireland Scheme reflect this.
In a life assurance case where the person to be insured had a serious cardiac condition the
agent of the insurer failed to investigate the circumstances or explain the duty of disclosure to the
proposer. There was clearly non disclosure of material facts but there was an award of 50% of
the sum assured, the non disclosure being mitigated by the agent‘s failings. 85
In one case of non disclosure of a previous claims history in relation to household insurance, an
accidental non disclosure was condoned and the claim met in the usual way. 86
Due to an ambiguity in one of the questions on the proposal form, a response was held to be a
misrepresentation, not non disclosure. The Ombudsman applied a proportionality remedy for the
insurer, allowing the insured to recover 70% on a household policy claim. 87
3.62 The decisions of the Insurance Ombudsman in the 1999 to 2004 period continued to
demonstrate a similar approach to non disclosure issues with cases going either way. 88 For example
An assured died of cancer 12 months after a life policy came into force. This policy was an
upgrade on three other policies that went back for a period of six years. At the time when the
first policy was taken out, there was non disclosure of the fact that the proposer was on
medication for high blood pressure. That condition had no link with the cause of death but it was
probably material.
3.63 The Insurance Ombudsman observed that this kind of situation:
―where the death is due to a condition unrelated to the cause of death, assurers occasionally
take the view that a reasonable approach is to pay the sum assured on an ex-gratia basis, or if
a significant extra premium has been lost because of the non-disclosure of the pre-existing
condition to make some downward adjustment to their payment.‖
3.64 The Insurance Ombudsman held that the refusal to pay on the claim was in all the
circumstances of the case ―too harsh‖ and she upheld the complaint. 89
A proposal form for life cover asked, ―if you have given up drinking alcohol, please state how
long since stopping, reason for discontinuing and previous consumption‖. The reply, ―3 years
due to ulcer‖ was incomplete. Further inquiries would have revealed a history of abuse involving
hospitalisation. Death was the result of lung cancer, caused by smoking, a habit which was
disclosed on the proposal form. The Insurance Ombudsman noted that:
―the Company went on to admit that there was a degree of disclosure, which should have
prompted it to make some further enquiries. In view of the fact that recognising what
constitutes a ―material fact‖ may be obvious to an underwriter but not necessarily to a member
of the general public, the Company reviewed its position and agreed to admit the claim in
amount £30,000.‖ 90
In one case of non disclosure on an industrial life policy, where medical reports were available,
the insured did not exercise the option to send the proposer for a medical examination. Because
both parties ―were remiss‖ an ex gratia award was recommended. 91
85
86
87
88
89
90
91
Case Study 50 of the Digest.
Case Study 76 of the Digest. Contrast Case Study 4 in Annual Report 2010, p.60.
Case Study 159 of the Digest.
For instances finding for the insurer see Case Study 15, 2000, Case Study 14, 2003.
Case Study 8, 1999. See also Case Study 10, 1999 where a proportionate settlement of 50% of a claim was
reached.
Case Study 22, 2000.
Case Study 16, 2002.
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