Section 8 of the Consumer Insurance Contracts Act (2019 Act) came into operation on 1 September 2021. The provides for pre-contractual duties of consumers and insurers. Most notably, and as we previously discussed in our earlier briefing here, the duties in the section replace the principle of utmost good faith and duties of disclosure of a consumer in pre-contractual stages of an insurance contact. Section 8(2) of the 2019 Act puts the onus on the insurers to ask specific questions related to the insurance contract and does not require the consumer to volunteer any additional information. Under section 8(5)(a) the insurer is obliged to draft questions using plain and intelligible language. The onus of proving that these questions are indeed plain and intelligible rests with the insurer. Section 8(5)(b) tilts the balance in favour of the consumer, in that if there is ambiguity or doubt about the meaning of a question, the interpretation most favourable to the consumer will prevail.
Although the operation of section 8 is still in its infancy, the High Court has reminded insurers to take section 8 of the 2019 Act to heart when drafting consumer insurance documents. In obiter observations in his judgment in Billane and Billane v Financial Services and Pensions Ombudsman [2022] IEHC 77, Mr Justice Barrett opined that the requirements under section 8 are rigorous and will be applied scrupulously by the courts. These comments were given in a judgment on costs following a failed appeal against a decision of the Financial Services and Pensions Ombudsman that a home insurance policy was void because of material non-disclosure.
Note of Caution
The comments of Barrett J are an important reminder to insurers to fully consider the import of section 8 on their dealings with consumers, and of the onerous pre-contractual duties on insurers under the section. Insurers are urged to take note of the obligation to avoid the use of general questions, and the requirement to use clear and plain language in their dealings with consumers. Applying the comments of Barrett J, the court will require strict adherence to these obligations.
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