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What general rules, requirements and procedures govern the conclusion of (re)insurance contracts in your jurisdiction?
The standard principles of Irish contract law apply to insurance contracts. As a general rule, in order to be enforceable under Irish common law, a contract must contain an offer by one party which is accepted by another and the parties must intend to create a legal relationship between each other. Consideration must pass between the parties and they must enjoy privity of contract.
However, certain peculiarities apply in the case of insurance contracts. For example, the insured party must have an insurable interest in the subject matter that is insured. Other principles and rules include the duty of disclosure placed on the insured, the nature and scope of pre-contractual misrepresentation by the insured, the relationship between exclusions in insurance contracts and the general law on unfair contract terms.
Insurance contracts also differ to most other contracts in that the parties thereto are under an obligation of utmost good faith. In order to have a meaningful insurance agreement, each party must be totally honest so that risk may be transferred for a reasonable premium. An insurer will rely heavily on the information provided by the applicant in the proposal form.
The insured is also required to disclose any material changes to facts that may have occurred since the inception or renewal of the policy, as appropriate.
In addition, ‘cooling off’ cancellation rights apply for life policies, and for certain others.
Are (re)insurance contracts subject to any mandatory/prohibited provisions?
There are a number of formal requirements to be met in motor insurance policies, in marine insurance and in life assurance policies as a result of particular statutory requirements. Further, obligations arise under consumer information, unfair contract terms, sale of goods and supply of services and distance marketing legislation, as well as there being pre-contractual provision of information requirements.
More generally, in order to be a legally enforceable contract, the policy must include detail as to the key terms of the cover that is to be provided, including:
- the risk or subject matter to be covered under the policy;
- the date of commencement and the term of cover under the policy; and
- the level of cover to be provided in the event of a loss.
Can any terms by implied into (re)insurance contracts (eg, a duty of good faith)?
See “What general rules, requirements and procedures govern the conclusion of (re)insurance contracts in your jurisdiction?” above.
What standard or common contractual terms are in use?
In addition to matters such as risk and subject matter, date of commencement and term of cover, as outlined above, the insurance contracts will usually contain warranties and conditions.
Most proposal forms include a declaration to be signed by the applicant to the effect that all information provided in the proposal form is accurate and complete and acknowledging that such information will form the basis of the insurance contract.
What is the state of development in your jurisdiction with regard to the use of ‘smart’ contracts (ie, blockchain based) for (re)insurance purposes? Are any other types of financial technology commonly used in the conclusion of (re)insurance contracts?
There is much industry discussion (eg, papers and conference topics) about new and innovative technology solutions for the insurance industry. As recently reported by the Central Bank in its June 2017 publication Industry Research on the Digitalisation of Financial Services, technology such as smart contracts, blockchain and end-to-end (sales, service, renewal, claims) digital capability are all being explored by insurers in the Irish market. Technology such as telematics, mobile payments and social media complaints handling are already in use in the Irish market.
What rules and procedures govern breach of contract (for both (re)insurer and insured)?
The effect of a breach of contract depends on the type of breach, but can result in an insurance contract being deemed void or voidable. If the insured breaches a warranty (no matter how insignificant that breach may appear), the insurer will be entitled to repudiate liability and avoid the policy from the date of such breach.
Where the insured has breached a condition precedent to liability, the insurer will be entitled to terminate the entire policy ab initio. If there is a breach of a condition that goes to the heart of the contract, the insurer may terminate the policy from the date of the breach. If the breach does not go to the heart of the contract, the insurer may still sue for any loss suffered as a result of the breach.
An insurer may also be entitled to avoid paying out under a policy where the insured has failed to disclose all relevant material facts relating to that policy (ie, a breach of the basis of agreement declaration).
Where the insurer has breached the contract, the general actions for breach of contract are available to the insured (subject to the terms of the insurance contracting providing otherwise).
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