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December 19, 2014

The Statement of General Insurance Practice seems to have been forgotten or ignored.

As you are aware the Irish Insurance Federation (IIF) was replaced by “Insurance Ireland”, a body which represents circa 95% of the domestic insurance market.

The Insurance Act 1989 recognised the need for reform of the duty of disclosure on foot of discussions between the IIF and the Department of Industry and Commerce. As a result the IIF introduced voluntary Codes of Conduct and Statements of Insurance Practice. These in general follow the Statements of Insurance Practice introduced by the insurance industry in the U.K.

The codes attempted to modify the rigours of the duty of disclosure in so far as they applied to Policyholders insured in a personal capacity. In other words the codes do not apply to commercial concerns. The codes were an attempt by Insurers to lessen the obligations imposed by the duty of disclosure. Whilst the codes are not legally binding Insurers will, on balance, follow the recommendations of the codes as outlined.

The Statement of General Insurance Practice is particularly important in the context of proposal forms and claims.
In terms of proposal forms there is an obligation on Insurers to outline their questions in clear and unambiguous terms and to avoid asking questions which require expert knowledge.

In relation to claims an Insurer will not repudiate liability to indemnify a Policyholder

1. “on grounds of non-disclosure of a material fact which a Policyholder could not reasonably be expected to have disclosed”.
2. “on grounds of misrepresentation unless it is a deliberate or negligent misrepresentation of a material fact”.
3. “on grounds of breach of warranty or condition where the circumstances of the loss are unconnected with the breach unless a fraud is involved”.

“Insurance Ireland” do not post the Statement of General Insurance Practice on their website. I contacted their representative who indicated that the various codes are under review but as far as “Insurance Ireland” are concerned they are still in operation and apply as they did when those subscribing Insurers were represented by the IIF.

From a claims perspective it is important to be aware of the Statement of General Insurance Practice and in particular in the context of a case being referred to Arbitration or the FSO. In this respect the Code “shall be taken into account in Arbitration and any other referral procedures which may apply in the event of disputes between Policyholders and Insurers”.

Alan FitzGerald, FCII., FCILA., FUEDI-ELAE

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