The Insurance (Miscellaneous Provisions) Act 2022 – Disclosure of Deductions from Claim Settlements

Speed Read 

In previous commentary, we noted that the Commencement Order of the Insurance (Miscellaneous Provisions) Act 2022 (the Act) was signed on 7 July 2022, commencing most provisions. We focus here on requirements for disclosure of deductions from claim settlements, highlighting the new statutory obligations imposed on insurers. The changes follow the COVID-19 epidemic and the controversy which arose as to whether, in calculating the insured's loss for business interruption claims, the insurer could take account of state supports received during COVID, which reduced the insured's loss. 

The Act changes domestic insurance law, including the Consumer Insurance Contracts Act 2019 (CICA) and the Central Bank (National Claims Information Database) Act 2018 (the 2018 Act), to:-

  • Allow the Central Bank of Ireland (CBI) to collect data from insurers about the deduction of state supports from claim settlements for certain insurance policies; and
  • Impose a new requirement on insurers to inform consumers of certain deductions from their insurance claim settlements.

Amendments to CICA 

Among the changes to CICA, a new section 16B requires insurers to disclose to consumers if deductions have been made to their claim settlements under non-life insurance contracts. This specifically includes deductions in respect of public moneys (moneys issued out of the Central Fund or provided by the Oireachtas). An insurer must notify the consumer in writing of the amount of and reason for the deduction. Failure to do so will be a contravention for the purposes of the Central Bank Act 1942. This section will commence on 1 January 2023.

Amendments to the 2018 Act

The Act now defines "public moneys" to the 2018 Act as "moneys charged on or issued out of the Central Fund or the growing produce thereof or provided by the Oireachtas” and amends section 8 to include additional information to be collected by the CBI: "details of the costs borne and provisions made associated with dealing with relevant claims, including details of deductions, in respect of payments out of public moneys, made by insurance undertakings from the amounts paid in satisfaction of relevant claims.”

In practice, this provides a statutory basis for the CBI's existing practice of collecting information from insurers about deductions of state supports from claim settlements, for certain classes of insurance.

Key Takeaways

  • The Act introduces a new obligation on insurers to disclose deductions to consumer policyholders, including deductions for payments of public moneys - it does not make such deductions illegal.  
  • The fundamental legal position remains that the rationale of insurance is to indemnify losses - if losses are reduced for whatever reason (government subsidies or otherwise), then it follows that this should reduce the recovery of monies from insurers. However, there may be political and reputational pressure on insurers to refrain from adopting the traditional legal analysis in this context. 
  • Business interruption and enhanced disclosure remain areas of focus for the CBI and we can expect further attention on the issue in future.

For more information on this topic please contact James Grennan, Partner, Insurance & Reinsurance; Linda Duffy, Associate, Litigation & Dispute Resolution; Liam Kennedy, Partner, Litigation & Dispute Resolution; or any member of A&L Goodbody's Insurance & Reinsurance team.

Date published: 26 July 2022