Ancient laws unfairly give insurers the whip hand
Published 19/07/2015 | 02:30
There are lots of examples to choose from, where insurance companies deny legitimate claims. One concerns an elderly man whose front door was broken down and around €7,000 worth of goods stolen from his home.
The man made a claim to his insurance company - but to his astonishment, it was refused. The insurer argued that he had provided the wrong year of construction for the house on the proposal form.
Case shut. The law is with the insurer on this.
Never mind that these laws date back 200 years and were designed to give strong powers to insurers to refuse to settle a claim, as they were designed at a time when insurance was about covering a sailing ship.
Traders often had more information than insurers to judge the risk. Incredibly, the law on insurance contracts has changed little since - allowing insurers to wriggle out of settling claims today.
This is despite the fact that insurers have become large multinational corporations with huge financial, technical and actuarial resources.
In the case of the senior citizen denied a payout, his broker, Jonathan Hehir of CoverInAClick.ie, was able to argue that the doors and windows in the house had recently been replaced and the age of the house had no bearing on the claim. The claim was eventually paid.
But it is one example of unfair and unjust terms and conditions in insurance contracts that need to be changed, as was recommended recently by the Law Reform Commission (LRC).
The LRC has produced a thorough report which found that many of the rules are unfair and unjust when it comes to how consumers and small firms are treated by insurers.
The report makes 105 recommendations, seeking to update the law 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 said in a statement.
Other examples of unfair practice by insurance firms include a man whose house was burned down but the insurer refused to pay him a cent because he had once received €53 in an insurance claim after a pump was damaged and he had neglected to mention this on the proposal form.
The duty on consumers to disclose information when applying for a policy is too onerous, the LRC said.
This can lead to insurers to legally refuse to settle a claim even when the non-disclosure was irrelevant information.
The law is an ass when it comes to insurance and it needs to change.
Sunday Indo Business