On 16 July 2020, the Minister for Finance, Paschal Donohoe TD
announced that many sections of the Consumer Insurance
Contracts Act 2019 (the
“Act”), which was signed into
law on 26 December 2019, will commence on 1 September 2020,
with the commencement of some of the more onerous sections being
deferred until 1 September 2021.
The introduction of the Act is a significant development in
insurance law for consumers. It is important insurers are aware of
the new statutory obligations for insurance policies, particularly
the obligations around plain and intelligible language and ensuring
that the right questions are asked of consumers.
Summary of Scope
Unless otherwise provided, the Act applies to life insurance and
non-life insurance contracts agreed or varied or renewed following
commencement of the Act.
The Act applies to “consumers” as defined in the
Financial Services and Pensions Ombudsman Act
2017 which means the Act applies to
insurance contracts with individuals, unincorporated bodies (such
as sole traders, partnerships and charities) and incorporated
bodies with a turnover of less than €3 million, provided such
businesses are not members of a group having a combined turnover
greater than €3 million.
The Act extends the EC (Unfair Terms in Consumer Contracts)
Regulations 1995 to consumers under the Act.
Commencement of the Act
The key sections of the Act which are due to commence on 1
September 2020 are as follows:
(i) Section 7 provides for the abolition of the
insurable interest principle as a pre-requisite to a consumer
making a valid claim. A claim under an otherwise valid contract of
insurance may no longer be rejected on the basis of a consumer not
having a valid interest in the subject matter of the contract at
the time the contract was entered or at the time of the loss.
Where the insurance contract is also a contract of indemnity,
the Act acknowledges that a consumer may be required to have an
interest in the subject matter, however, such interest does not
extend beyond a factual expectation of the economic benefits or
losses that would arise in the ordinary course of events.
(ii) Section 11 provides that a consumer may
cancel a contract of insurance within 14 days of being notified of
the conclusion of the contract. This right only applies to
contracts that are not covered by the cancellation rights set out
in the Solvency II Regulations or in the European Communities
(Distance Marketing of Consumer Financial Services) Regulations
(iii) Section 16-18 detail claims handling
duties for both the consumer and insurer and proportionate
Insurers will be required to (i) handle claims
promptly and fairly; (ii) engage with the insured
and allow them to submit evidence; and (iii)
notify the insured at the…