Consumer Insurance Contracts Act 2019 – Provisions commencing September 2021
Insurers entering contracts of insurance with Irish consumers will be impacted by changes to Irish law with effect from 1 September 2021. These changes will affect contracts issued, varied or renewed from that date.
The Consumer Insurance Contracts Act 2019 (CICA) was signed into law in December 2019. However, as noted in our July 2020 CICA update, the commencement of CICA was split into two parts, with Sections 8, 9, 12 and 14(1) - (5) delayed until 1 September 2021. These are CICA's more onerous provisions and, for the most part, will likely require systems and process changes by insurers. Subsection 18(4) of CICA, relating to exclusions for property damage in certain circumstances, will not be commenced.
The key changes coming into effect on 1 September 2021 include:
- the introduction of a statutory duty to answer all questions posed by the insurer 'honestly and with reasonable care' in place of the contractual duty of 'utmost good faith' (Section 8), a significantly lower standard
- a limit on the insurer's ability to use the remedies for non-disclosure unless the insurer can show that it would not have entered into the contract of insurance, or only would have done so under different terms (Section 8)
- a duty on insurers to provide more information to consumers pre-contract (on paper or on another durable medium) . Insurers must ask questions that are specific, plain and intelligible, and must inform consumers of the general nature and effect of the pre-contractual duty of disclosure before entering into a contract and at renewal (Section 8)
- proportionate remedies for misrepresentation by the consumer (depending on whether the misrepresentation was innocent, negligent or fraudulent) (Section 9)
- increased duties for insurers at renewal (e.g. for non-life contracts, insurers must provide a schedule of all premiums and claims paid for the preceding 5 years) (Section 12)
- changes to disclosure duties at renewal (Section 14 (1) – (5)).
Key changes are set out further below:
- Consumers are no longer required to volunteer information at renewal, and do not have to provide any information at renewal unless specifically asked to by an insurer. Again, insurers cannot ask general questions.
- The insurer must ask any such questions on paper or on another durable medium.
- Unless new information is provided by the consumer in response to an insurer's request, the presumption is that the information previously provided still applies (provided the consumer continues to pay renewal premium).
These sections represent a considerable change to the rules surrounding disclosure and place a significant onus on insurers to ensure that they are gathering the correct information from consumers at the time of the contract being entered into. This assessment is likely to be particularly important for telephone and online sales as CICA will require insurers to provide additional information to consumers at the pre-contract/renewal stage in paper or in a durable medium. Insurers should examine how their contracts are currently incepted, and establish whether system changes are required to implement the incoming changes.
For further information, please contact James Grennan, Laura Mulleady, Liam Kennedy, Andrea Hynes, Don Collins or your regular A&L Goodbody Insurance and Reinsurance team contact.
Date published: 2 June 2021