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INSURANCE REFORM IN IRELAND

January 14, 2021 in Uncategorized

The Irish Government on the 8th December 2020 published its Action Plan for Insurance Reform, this being the first Action Plan on Insurance Reform.

This was published against the background of an insurance crisis of recent years which has been highlighted in circumstances where Insurers are no longer prepared to insure certain sectors. Lobbying groups such as Brokers Ireland and the Alliance for Insurance Reform have broadly welcomed the Action Plan with a focus on areas that they wish to see prioritised.

The Plan sets out 66 actions to reduce costs for both consumers and businesses and the Plan largely pledges the following:

-Replacing the Book of Quantum with new guidelines and enhancing the role of the Personal Injuries Assessment Board (PIAB).

-Examining the duty of care particularly with respect to Occupier Liability matters which would greatly benefit in particular sporting/voluntary bodies and community groups.

-Enhancing the National Claims Information Database.

-Judicial Guidelines for capping personal injury awards.

-Reducing insurance fraud by including placing perjury on a statutory footing making the offence easier to prosecute.

Further initiatives that have already been commenced include the Consumer Insurance Contracts Act 2019 and the establishment of a Department within Government to ensure greater insurance market competition on a cross-departmental basis.

Any one of the proposed reforms requires fuller consideration however it does appear that Insurance Reform is a priority despite other ongoing crises such as Covid-19 and Brexit.

CONCLUSION

Many of these reforms are far-reaching and will require the input of various sectors to ensure their viability or success. In presenting the reforms An Tánaiste indicated that there would be updates on a quarterly basis which will be monitored with interest.  In order to tackle fraud and abuses, some existing offences are being made easier to prosecute.  The timing and delivery of such reforms will be the measure of its success and as noted by the Alliance for Insurance Reform a previous recommendation by the costs of Insurance Working Group regarding a Garda (Police) division to prosecute insurance fraud has yet to be established.

For fuller advice regarding Insurance Reform in Ireland please contact Mary Byrne mbyrne@obl.ie of OBL Solicitors.

CCTV DISCLOSURE

December 1, 2020 in News

DUDGEON -V- SUPERMACS IRELAND LIMITED

A pre-trial hearing in the above case recently dealt with CCTV disclosure

Judgement of Mr Justice Barr of the 16th November 2020.

BACKGROUND

The Plaintiff alleges she was caused personal injury when attending the Defendant’s restaurant on the 6th January 2017. The Plaintiff contended that the seat upon she was sitting broke causing her personal injuries when she fell to the ground.

After consulting her solicitor a Section 11 preservation of evidence request issued. In the context of a Circuit Court discovery application, Circuit Court Judge Groarke refused to direct the Defendant to make discovery of the relevant CCTV footage.  The Plaintiff appealed to the High Court.

The Plaintiff’s case was that the CCTV footage represented the best evidence one can obtain regarding the occurrence of the event. A number of authorities such as Colston -v- Dunnes Stores (2019) were cited in regard to discovery of CCTV footage. The fact the chair was unavailable for inspection was cited as a further reason for the CCTV footage to be discovered.

The Defendants further submitted that the absence of the chair was irrelevant and submitted that the dispute as to whether the Plaintiff had fallen to the ground was a central issue for determination at the Trial.

The Defendant further submitted that the discovery of the CCTV footage would allow the Plaintiff “mend her hand” in advance of the hearing. The defence cited the Supreme Court authority of Keating -v- RTE (2013) that discovery “cannot be used to enable a person to plead the cause of action or a defence which he is not otherwise in a position to plead…”.

FINDING

Judge Barr noted that liability no longer was in dispute between the parties but the issue of causation and quantum remained contentious. He concluded that the only purpose in seeking discovery of the CCTV footage was to ascertain in advance of her evidence in chief and cross examination whether her assertion that she fell to the ground was in fact correct.

The discovery material goes exclusively to the issue of the Plaintiff’s credibility and based on the Stafford -v- Revenue Commissioners Authority, Judge Barr was satisfied that it was not appropriate to make discovery of same.

The Plaintiff would be in a position to proceed to give her evidence and call witnesses if required to confirm her version of events.

CONCLUSION

The Alliance for Insurance Reform welcomed the decision. The Alliance for Insurance Reform noted that data protection legislation regarding CCTV often unfavourably conflicted with legal defence entitlements in Public and Employer Liability cases. It was further stated there were some instances where there are GDPR requests for CCTV footage prior to personal injury claims being made.

CCTV footage is subject to GDPR Regulations and normally subject to a Section 11 preservation or disclosure of evidence request. Consideration requires to be given in every case whether or not to disclose same and at what time.

There is little dispute that CCTV is the best evidence of an incident, however a Plaintiff should not be given an automatic entitlement to sight of CCTV.  A Plaintiff is required to plead and verify their case in the absence of same save in limited circumstances where they may be rendered unconscious or worse. CCTV footage may be opened in a criminal case involving assault type cases and Defendants should ensure pleadings are delivered and verified in advance if possible in those circumstances.

Date Published 1st December 2020

Key Contacts

Mary Byrne Partner (mbyrne@obl.ie)

Ruth Hereward Associate (rhereward@obl.ie)

This document is for general guidance only and specific legal advice should be obtained as required.

Personal Injuries Award Update: Court of Appeal

August 12, 2020 in Education, News

A three Judge Court of Appeal has delivered Judgment in the case of McKeown -v- Crosby which analyses the application and efficacy of the Book of Quantum in Personal Injuries cases. Whelan J. and Power J. are both in agreement with Noonan J. who gave Judgment electronically.

This Appeal arises out of a €76,000 damages award from a Personal Injuries Action brought before the High Court in December of 2019.

The award for damages was broken down as €65,000 for pain and suffering to that date, €5,000 for pain and suffering into the future, and €6,000 for agreed Special Damages.

The appeal centred on whether the Book of Quantum is fully applied in Personal Injuries cases and how better consistency can be achieved.

The Appellants grounds for appeal were on the basis that the High Court Judge had erred in awarding such an amount and for not according sufficient weight to particular factual matters by the Trial Judge.

Interestingly, there was a cross appeal by the Plaintiff of the High Court Action who appealed the amount of future General Damages (€5,000) awarded amounted to “an error of law and fact by the Trial Judge.”

Giving Judgment electronically on the 11th August 2020, Noonan J. highlighted the disparity across awards to Plaintiffs and also acknowledging that in the world of Personal Injuries Litigation, some members of the Judiciary were looked upon more favourably than others, depending what side a practitioner was representing, of course. He stated that it cannot be fair on either party for the value of an award to be dependant on the Trial Judge.

In what could be viewed as a move from the traditional manner of making awards, Noonan J. suggests that legal practitioners could be afforded the opportunity to address the Court on the application of the Book of Quantum, much as is the case at present when addressing the Court regarding the issue of the costs of an Action. This is with a view to achieving greater consistency especially in lower value cases which, by definition, should be easier to assess.

Concluding the Judgment, Noonan J. found that the award of the High Court “by any reasonable measure it cannot be viewed as proportionate.” The Court applied Payne -v- Nugent as the most directly comparable case and again found the award to be disproportionate. As such, the Court awarded €25,000 for pain and suffering to that date, €5,000 for pain and suffering into the future and €6,000 for agreed Special Damages.

The reduction was based on the Book of Quantum alone as the Appellate Judge had only a short transcript and an ex-tempore Judgment from the originating matter to refer to.

The Judgment raises a number of questions regarding the awards in Personal Injuries Actions today.

Firstly, the reduction of €40,000 in General Damages awarded clearly places the Plaintiff within the Circuit Court jurisdiction, and not that of the High Court. Therefore, had a Justice of the High Court who was minded to take the same view as Noonan J. heard the matter originally, the Plaintiff would have been very much at risk of a Costs Differential Order under Section 17(5) of the Courts Act, 1981 (as amended) which provides that after the Hearing of and Action a Judge may “grant a special certificate in writing that, in the opinion of such Judge, it was reasonable in the interests of justice generally, owing to the exceptional nature of the proceedings or of any question of law contained therein, that the proceedings should have been commenced in the court in which they were commenced.”

This could have led to the Plaintiff being liable for the difference in the Plaintiff’s costs incurred in the Court where the Action was taken and the Court in which the Action should have been taken.

Secondly, though the assessment of damages is not an exact science, in Sinnott -v- Quinnsworth, O’Higgins C.J. held that when determining a figure which is fair and reasonable, “some regard should be had to the ordinary living standards in the country, to the general level of incomes and to the things upon which the plaintiff might reasonably be expected to spend money.”

To that end, and with the words of O’Higgins C.J. in mind, it is prudent to revert to the Judgment of Noonan J. who holds that “damages are, in theory at least, restitutional.”

Date Published: 12th August 2020

Key contacts:

Mary Byrne Partner (mbyrne@obl.ie)

Ruth Hereward Associate Solicitor (rhereward@obl.ie)

This document is for general guidance only and specific legal advice should be obtained as required.

CONSUMER INSURANCE CONTRACTS ACT 2019

July 21, 2020 in News

The Consumer Insurance Contracts Act 2019 (the “Act”) was signed into Law on the 26th December 2019 last. The Act will have a significant impact on Insurers conducting insurance business with consumers in Ireland.

The commencement date for the Act is anticipated to be 1st September 2020 although some provisions are delayed to 1st September 2021.

BACKGROUND

The Act followed from the Law Reform Commissions 2015 report – Consumer Insurance Contracts. The Act received cross party support in the Oireachtas and was sponsored by Pearse Doherty TD “in this day and age the insurance consumer is at a huge disadvantage when faced with the lawyered up, technically savvy insurer. We know the results, the insurer holds all of the cards”.

The Act was passed against a background of Insurance Reform and pressures to ensure consumers and small businesses are given better standing and rights therein in a relationship with the Insurance Industry.

The Minister for Finance advised that he intends the Act to commence on the 1st September 2020 with some sections delayed for one year.

SCOPE

 A consumer has the meaning given to it in Section 2 (1) of the Financial Services and Pensions Ombudsman Act 2017 for the purposes of this act.

It applies to Insurance Contracts with individuals, unincorporated bodies (sole traders), partnerships and charities and incorporated bodies with a turnover of less than €3 million (provided such businesses are not members of a group with a combined turnover of greater than €3 million).

It remains to be seen whether similar legislation will be brought forward in regard to Commercial Insurance Contracts.

The impact of these changes will of course take time to filter through. Many of the changes are not dissimilar to those in the UK and the likelihood is that Irish Court Judgements will have cognisance and regard to UK practice and applicable case law. The Central Bank of Ireland has also been given the authority to issue a code of practice on the form of a Contract of Insurance but developments in that regard remain to be seen.

DUTY OF DISCLOSURE/PROPOSAL

 Much litigation regarding indemnity disputes between consumers and insurers centres around the duties imposed in proposal situations.  One of the most significant changes in the Act is regarding the Duty of Disclosure and obligation of utmost good faith (uberrima fides). The Act replaces these duties with requirements to answer specific questions honestly and with reasonable care. This shifts the obligation from the requirement to volunteer information imposing a duty on Insurers to pose unambiguous questions in plain and intelligible language. The Insurer can no longer rely or ask open ended questions. Forms will require to be updated and this imposes a significant burden or duty onto both Brokers and Underwriters.

Insurers therefore can no longer rely on the old historic and well established principle of uberrima fides. Many practices regarding insurance proposals will not remain fit for purpose given these reforms.

RENEWALS

 The above Duty of Disclosures apply to insurance renewals as well as fresh new insurance proposals. Insurers in addition will now be obligated to share Policyholders claims history and premia cost for the previous five years. Health Insurers are exempt in that regard.

MISREPRESENTATION

The former contractual duties and requirements under the uberrima fides obligations sometimes resulted in “an all or nothing” remedy for misrepresentation by consumers. The Law Reform Commission Report described the full rescission of a contract in such circumstances as “draconian” and belonging to another legal era. This Act replaces this absolute remedy with proportionate type remedies. In the event that a misrepresentation is fraudulent the Insurer will remain entitled to void the contract in full. However, where a misrepresentation is innocent an Insurer will be required to pay the relevant claim in full. If the misrepresentation is negligent the Insurer will require to seek to demonstrate what it would have done had it known all relevant facts.

There will be likely much case law in the Irish Courts regarding these changes. In simple terms one could view matters through the following:

  • Fraudulent misrepresentation – Insurer remains entitled to void contract in full.
  • Innocent misrepresentation – Insurer required to deal with a claim in full.
  • Negligent misrepresentation – Insurer will require to seek to demonstrate what it would have done differently.

The above is an extremely simple outline of these areas of law that undoubtedly will throw up significant disputes requiring legal interpretation.

The Act is attempting to allow proportionate remedies for misrepresentation but the provisions in regard to remedies are not likely to commence until 1st September 2021.

STATEMENTS/WARRANTIES

The Act abolishes one significant “basis of contract clauses” in Insurance Contracts. This had resulted in consumer statements in proposals being elevated to those of a warranty. This was perceived as one sided and an unfair clause and will now be invalid and unenforceable.

CLAIMS HANDLING

 The Act reiterates the requirement for a consumer to cooperate with an Insurer in the investigation of an insured event. This includes responding to reasonable requests for information in an honest and reasonably careful manner. In the event of a failure to comply within a specified notification period, the Insurer must show prejudice before being entitled to refuse cover. In the event of no such prejudice arising as a result of non-compliance the Insurer is not entitled to refuse liability under the claim on that ground alone.

The Act also deals with disputes after the conclusion or coming into being of the Insurance Contract. There are existing duties on both the consumer and insurer in respect of claims handling. A consumer must cooperate with an insurer in the investigation of events likely to lead to a claim and notify the occurrence of a notifiable event within a reasonable time.

The insurer has duties to handle claims promptly, fairly and engage with the consumer regarding a claim. There is an obligation to inform the consumer where a claim has been settled or otherwise disposed of and to make payments within a “reasonable time”.

In property matters the Act allows deferring of the insurers obligation to pay a claim until repair, replacement or reinstatement work has been completed and specified documentation has been furnished to the insurer. The Act introduced proportionate remedies in respect of claims handling. Where a claim made by a consumer contains information which is false or misleading or where the consumer knows it is false or misleading the insurer any refuse to pay the claim and terminate the contract in full.

Many of these provisions neglect current practices in claims handling but now enshrine these requirements in statute.

SUBROGATION/THIRD PARTY RIGHTS

The Act implements changes to avoid unintended consequences for family and employer/employee relationships where an insurer exercises or enforces subrogation rights.

Subrogation is a legal principle where it intitles the insurer to stand in the place of a Policyholder and recover against a Third Party (wrongdoer) who may be responsible for the cause of claim or damage discharged by the insurer.

The Act limits circumstances where an insurer cannot exercise its right of subrogation against family members who may be uninsured or employees of an insured employer. There are exceptions in the latter category where losses are caused unintentionally or recklessly by an employee.

PRIVITY OF CONTRACT

The Act introduces a statutory exemption to the rigidity of the so-called “Privity of Contract Rules”. Much of these rules are historic and Ireland has no direct equivalent to the United Kingdom Contracts (Rights of Third Parties) Act 1999. This legislation allows Third Party Claimants bring a case against an insurer where the insured has died, cannot be found or is insolvent or where the Court considers it just and equitable to allow it. There have been numerous high profile cases in personal injuries actions where significantly injured Claimants have not been in a position to bring an action for damages due to breaches of policy conditions or conditions precedent to the Contract.

In the case of Hu -v- Duleek Form Work Limited [2013] the Plaintiff was aware his employer had a contract of insurance which was intended to cover employers negligence but a breach of a condition precedent to liability, namely the payment of an excess of €1,000.00 resulted in the insurance contract being not responding. Whilst this may have been unfair on the basis of those legal principles and Orders were made often with regret the new act now confers rights to the Third Party in such circumstances where they show an insurance contract existed. The Act aside from the above circumstances of death, missing or insolvency may also allow such matters proceed where “it appears to a Court to be just and equable to do so”.

PRACTICAL IMPLICATIONS OF THE ACT FOR INSURERS

When the Act comes into being it will have implications that affect both consumers and insurer both prior to the inception of the insurance contract and subsequent thereto. Insurers and Brokers will require to consider and amend proposal forms to reflect the new reality envisaged by the Act. Most current wordings and proposal forms will not be fit for purpose with the changes envisaged and must be reviewed fully in relation to new proposals and at renewal stage. Insureds will have to be advised regarding their rep-contractual duties of disclosure and proposal forms will become more detailed with specific questions.

Underwriters will have to be clear about assessing risks against this new reality. They will rely on new proposal forms, evidencing and attitudes. Claims handlers will require to redraft any written claims processes in being. They will require to process and deal with First and Third Party claims promptly and keep records. Engagement with the insured is important and advising them regarding settlements. Any late notification matters will have to be assessed on a case by case basis and the Courts will reluctantly refuse indemnity where clear prejudice is established. Third-Party rights are significantly enhanced which could lead to further claims. Insurers are disadvantaged somewhat when traditional “get out” Privity of Contract or Policy Breaches will not allow them to avoid coverage. This will be advantageous to Third Parties and remove many previous barriers.

Date published 21st July 2020

This document is for general guidance only and specific legal advice should be obtained as required.

Key contacts:

 Jack O’Brien Partner (jobrien@obl.ie)

Mary Byrne Partner (mbyrne@obl.ie)

 www.obl.ie