Insurance contracts 'unfair' to consumers - law body
The law related to insurance contracts should be radically changed to make it fairer for consumers making claims, the Law Reform Commission has recommended in a major new study.
It found the rules were unfair and unjust when it comes to how consumers and small firms are treated by insurers.
The report, which makes 105 recommendations, says that much of insurance law dates from the 18th century and needs to be updated to give more power to consumers.
"The report recommends the enactment of legislation to reform and re-balance the duties of insurers and consumers," the Law Reform Commission (LRC) said in a statement.
It found that many of the rules have not changed from the time when insurance was arranged between shipping traders and small insurers, and the traders often had more information than insurers to judge risks being insured.
But since then insurers have become large multinationals with huge financial, technical and actuarial resources.
"The current rules do not match current realities," the (LRC) report states.
The law body is headed up by former judge of the High Court Mr Justice John Quirke and the majority of its recommendations form the basis for the drafting of new legislation.
The duty on consumers to disclose information when applying for a policy are too onerous, the LRC said.
This can lead to insurers legally refusing to settle a claim even when the non-disclosure was irrelevant information.
Insurers should not be able to repudiate all liability under the insurance contract, but should be required to make proportionate payments to the consumer.
Third-parties to an insurance contract should be able to make a claim, the commission said. At the moment if a worker is injured and makes a claim, but his employer is in liquidation, receivership or examinership, they are not entitled to a payout.
And it is recommended that consumers should be asked by an insurer to prove they have suffered an actual loss, rather than having an "insurable interest" in the risk being insured.
There should also be a duty on consumers to pay premiums in a reasonable time.