The EU General Data Protection Regulation (GDPR) recently introduced a new regime of administrative fines for data protection infringements and provided for a tiered penalty structure based on the nature of the infringement. However, the insurability of GDPR fines remains a grey area and there is a large question mark over whether such fines will be insurable in Ireland where there is an element of moral turpitude in the infringement.
Minister for Finance and Public Expenditure and Reform Paschal Donohoe signed the EU (Insurance Distribution) Regulations 2018 (the IDD Regulations) into national law in June 2018. However, the implementation of the IDD Regulations was postponed until 1 October 2018 to provide the insurance industry with additional time to put in place the necessary organisational and technical changes required to ensure compliance. This article reviews the key changes resulting from the IDD Regulations.
A recently signed ministerial order marks the formal introduction of long-awaited periodic payment orders (PPOs) in Ireland. This should be a welcome development for insurers as it will avoid upfront compensation payments in catastrophic injury cases. It will also align the Irish regime of awards in case of catastrophic injury with the UK system, under which PPOs are already available.
The April 2018 decision of Bin Sun v Jason Price provides a useful summary of the circumstances in which a party can be joined as a co-defendant against the wishes of a plaintiff. It also provides clarity for insurers as to the circumstances in which they can seek to be joined to proceedings at first instance, which could prevent or substantially reduce their exposure in a subsequent application by a claimant to enforce against them.
Large corporates based in Ireland typically have a suite of non-life insurance policies to cover a variety of risks. Given the fact that the UK insurance market is the biggest in the European Union, it is likely that at least some of the policies held by corporates based in Ireland will have been written by UK or Gibraltar-licensed insurers. As such, whatever form Brexit ultimately takes, Irish policyholders with policies written by UK insurers must assess any risk to (among other things) their ability to renew.
A recent Supreme Court decision confirming that third-party litigation funding in return for a share of the proceeds is unlawful in Ireland has put after-the-event (ATE) insurance back in the spotlight as the only legitimate alternative method of funding litigation. Although a relatively new insurance product, a number of insurers are now providing ATE insurance in Ireland.
The Minimum Competency Code 2017 has been introduced to incorporate the implementation of the EU Insurance Distribution Directive, the EU Markets in Financial Instruments Directive II and associated European Securities and Markets Authority guidelines and the European Regulations 2016. The main changes under the code relate to the qualification and experience requirements of the staff of financial services providers.
The existing legislative and regulatory framework for motor insurance in Ireland is driver-centric and needs to adapt for the era of autonomous vehicles. At present, driving is defined as 'managing and controlling' a vehicle. This is not appropriate for autonomous vehicles, where the technology and not the driver controls the vehicle. The legal landscape must keep pace with this cutting-edge technology and efforts must be made now to consider how best to address the various issues which will arise.
The Consumer Insurance Contracts Bill 2017 recently passed the second stage in the Dáil (the lower house of Parliament) and will now proceed to the committee stage. The bill will apply to consumer insurance contracts only. It will replace the existing duty of disclosure with a statutory duty to answer specific questions carefully and honestly and will allow the insured to claim damages for late payment of claims by insurers. At present, there is no timeline for implementation.
The High Court recently upheld a finding of the Financial Services Ombudsman that an insurer was entitled to avoid a life assurance policy on the grounds of non-disclosure. Significantly, the decision turned on the strength of the proposal form and serves as a useful reminder to insurers of the importance of a well-drafted proposal form.
The EU Solvency II Directive was transposed into domestic Irish law by the European Union (Insurance and Reinsurance) Regulations. The Solvency II regime provides welcome clarity regarding the functions that an insurer may outsource and the requirements which must be complied with before outsourcing. This is particularly welcome news for captive insurers which tend to rely heavily on outsource service providers.
The High Court recently confirmed that third-party rights against insurers in Ireland are restricted, providing comfort for insurers in the context of solicitors' professional indemnity insurance. The decision is consistent with recent confirmation from the authorities that third parties have no direct right of action against insurers. To the extent that a specific statutory provision permits a restricted right of action, the insured defendant's liability must be established in the first instance.
The Court of Appeal recently ruled in a case which considered the 'real rate of return' discount which would be applied to an injured plaintiff's future care costs. When quantifying future losses in personal injury actions, future care costs may now be discounted by only 1% and as a result underwriters will be ordered to pay out higher lump-sum damages awards. There is likely to be a knock-on effect which will see underwriters increasing premiums.
The Central Bank of Ireland's Fitness and Probity Regime has been reviewed to determine its compatibility with the EU Solvency II Directive. A number of amendments are set to be made to the regime for all (re)insurance undertakings, including changes to key function holders, outsourcing key functions, the head of the actuarial function and the removal of the chief actuary and signing actuary.
The Law Reform Commission of Ireland recently published its draft Consumer Insurance Contracts Bill 2015. Unlike the UK Insurance Act, the commission's bill applies only to consumer insurance contracts. While the changes proposed in the bill are not generally as wide-reaching as those to be implemented by the UK act, there are some similarities, including changes to the duty of disclosure and proportionate remedies for non-disclosure.
The European Union (Insurance and Reinsurance) Regulations 2015 were recently signed by the minister for finance, transposing the EU Solvency II Directive into Irish law. The regulations establish new capital requirements, valuation techniques and governance and reporting standards. They also provide the Central Bank of Ireland with increased supervisory responsibilities.
The General Scheme of the Civil Liability (Amendment) Bill provides that a court awarding damages for future monetary loss in respect of catastrophic injury may order that all or part of the damages be paid as periodic payments where it is in the best interests of the plaintiff. The use of a periodic payment order is intended to transfer risk from the plaintiff to the insurer. However, the plaintiff will bear the risk that the insurer could become insolvent.
The recent High Court decision in Michael Murphy v Allianz Plc provides further clarification of the scope of Section 62 of the Civil Liability Act 1961 – in particular, the conditions which must be satisfied for its application. The decision will be welcomed by insurers, as it confirms yet again that the Irish courts will require strict compliance where an injured third party seeks to rely on Section 62.
The High Court recently considered whether the Financial Services Ombudsman (FSO) had erred in law in determining that an insurer was entitled to void a home insurance policy for material non-disclosure. The court noted that the case concerned a consumer contract and thus all comments and findings of the court were made exclusively in that context. The court concluded that the deputy FSO had erred in law on at least five grounds.
The Law Reform Commission has published its long-awaited report on consumer insurance contracts. The report makes 105 recommendations for reforms to the rules. According to the commission, the existing rules do not reflect the realities of the bargaining powers of consumers compared to large insurers. If adopted, insurers will have to redraft their consumer insurance policies.