The Minister for Finance’s recent announcement relating to the Commencement of Consumer Insurance Contracts Act 2019 (the Act) confirmed that the majority of the Act’s provisions will take effect on 1 September 2020. The provisions include
- Section 7 – which abolishes the principle of “insurable interest” as a pre-requisite to a consumer making a valid claim
- Sections 11 & 13 – which introduce a cooling – off period of 14 days together with cancellation rights
- Section 15 – which creates post – contractual duties including the introduction of an “alteration of risk” clause
- Sections 16 & 18 – which introduce claims handling duties and related requirements, handling claims promptly and fairly, making payments due within reasonable time, specific limitations on deferring property claim payments and proportionate remedies
- Section 19 – which replaces the use of warranties with the concept of “suspensive conditions”
- Sections 21 - 25 – which make changes to the insurers' right to subrogation for any claim and extends third party rights including the right of a third party to pursue an insurer directly via legal proceedings without the need to establish liability or obtain judgment against the policyholder first
Some elements delayed
From an insurer’s perspective, it is a positive that some of the more burdensome provisions will not take effect until 1 September 2021. This provides a much needed lead in time to comply with the substantial adjustments which will be required to documentation, processes and systems.
These latter provisions include:
- Section 8 - the abolishment of the long standing principle of utmost good faith and its replacement of a revised duty of disclosure. This puts the onus on insurers to ask relevant questions when consumers are taking out a policy
- Section 9 - which provides for the introduction of proportionate remedies for misrepresentation
- Section 12 – dealing with enhanced renewal rights for consumers
- Section 14(1)-(5) - outlining changes to the duties imposed on consumers and insurers on renewal
From the start of September, there are increased statutory obligations on insurers in the managing of any claims including a duty to keep consumers informed of claims against their policy. Insurers should continue to take all steps needed to ensure full compliance with the Act, although a further grace period has been granted for the more onerous provisions. It also remains to be seen whether the Central Bank will update its code of practice to reflect the new regime.
For more information, contact a member of our Insurance & Risk team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.