New rules come into force making it harder for insurers to decline valid claims
Sarah Rigney
Staff Writer

The final provisions of the Consumer Insurance Contract Act 2019 come into effect today. Here we break down what this means for policyholders and outline what changes to expect going forward.

There has been quite a lot of insurance talk in the news in recent months, with the Central Bank announcing it was banning ‘loyalty penalties’ back in July and with stories emerging about how Covid-19 will affect insurance policies

However, what many people may have forgotten about is that the final provisions of the Consumer Insurance Contract Act 2019 (CICA) are due to come into effect from the start of September. 

Insurance legislation is never the sexiest of topics! However it's vital that you understand what is happening and how it will affect your insurance policies going forward. 

Before we jump into the changes due to take place, first we should probably clarify what exactly CICA is!

What is the Consumer Insurance Contracts Act 2019?

Following a review of the laws that govern and regulate insurance contracts, the Law Reform Commission released a report on Consumer Insurance Contracts in 2015. 

The report found that insurance contracts that affect ordinary people and small businesses in Ireland were in need of reform.

As a result, the Consumer Insurance Contracts Act 2019 was signed into law in December 2019 and brings about significant changes to how consumer insurance contracts will operate in Ireland.

The legislation is aimed at addressing some of the perceived imbalances between insurers and policyholders, increasing consumer protection and creating greater transparency for consumers.

CICA impacts both life and non-life insurance contracts.

When will changes come into force?

The majority of provisions within the act began on 1st September 2020, however the remaining provisions are set to commence on 1st September 2021. This was to guarantee insurers had ample time to prepare for the changes.

These changes will affect all policies issued, varied or renewed from this date. 

How will the changes affect consumers?

By updating and reforming insurance laws, the objective of CICA is to further protect consumers. The Act aims to make it more difficult for insurers to decline valid claims and will shift the balance of power away from insurers and towards consumers in their contracts.

Perhaps the biggest change is around how incorrect or incomplete information supplied by policyholders when they're applying for a policy is treated at a later stage if a claim is being made.

Previously, if a consumer innocently left out important information, perhaps because they weren’t asked a specific enough question when taking out the policy, a future claim could easily be rendered invalid by the insurer.  

However CICA puts far more of a burden on insurers to ask the right questions, at the right time, as opposed to leaving it solely up to the consumer to furnish everything that might later be deemed important. This will therefore make it harder for insurers to decline valid claims going forward.

What changes have already been made?

The majority of provisions were enacted from September 2020. Key changes include:

  • A new 14 day cooling-off period for all insurance products, with the consumer being given a right to cancel with no cost other than the premiums applicable to that period. This does not affect the 30-day cooling-off period applicable to life products.
  • Insurers must now notify the consumer of any adjustments to the terms and conditions of their policy at least 20 working days ahead of the renewal date.
  • The Act abolishes the requirement to have an insurable interest to claim. A claim cannot be rejected on the basis that the consumer does not have a valid interest in the subject matter of the insurance contract at the time the contract was entered or at the time of the loss. A policyholder will still be required to demonstrate loss to make a valid claim.
  • An insurer can now decline a claim if the subject matter and circumstances have changed so much that they’re no longer considered to be covered under the original policy.

What additional changes will there be?

From September 2021, additional changes will be enacted. Key changes include:

  • Ahead of renewal of non-life/general insurance, insurers must provide details of any premiums paid by the consumer and a list of claims that have been paid for the previous five years.
  • There is now a duty for insurers to provide specific information to consumers before contracts are issued and upon renewal. Consumers will be required to answer a set of clear questions honestly and with reasonable care.
  • Misrepresentation has now been divided into three classes - innocent, negligent and fraudulent. As referred to above, a claim cannot be declined any more under innocent misrepresentation. However a fraudulent misrepresentation, where someone actively seeks to withhold information, would result in a declined claim. A negligent misrepresentation, on the other hand, can lead to a claim being declined or being paid out depending on who was more at fault.

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What do you think of the changes being implemented by the Consumer Insurance Contracts Act 2019? Do you think they’ll significantly impact the insurance industry? We’d love to hear from you in the comments below!

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