The Consumer Insurance Contract Act 2019 (the “2019 Act”) will dramatically change the way life and non-life insurers contract with consumers. The majority of the 2019 Act’s provisions are set to come into effect on 1 September 2020. However, some of the more controversial aspects of the 2019 Act contained in sections 8, 9, 12 and 14 will not be commenced until 1 September 2021 to allow insurers time to comply with those requirements.

Hi, I’m Catherine Wolfe, an associate in the Insurance and Reinsurance team in Arthur Cox. In this audio briefing, I will be discussing some of the key legislative changes that will shortly come into effect under the Consumer Insurance Contract Act 2019.

So, what is the scope of the 2019 Act and who does it apply to?

Similar to its English law counterpart, the Consumer Insurance (Disclosure and Representation) Act 2012 (“CIDRA”), the 2019 Act dis-applies the pre-contractual principle of utmost good faith and aims to clamp down on the technical avoidance of claims by providing for proportionate remedies for breach of the consumer’s pre-contractual duty of disclosure.

However, the scope of the 2019 Acts is substantially broader than CIDRA. For example, CIDRA applies to insurance contracts entered into with individual consumers, whereas the definition of “consumer” under the 2019 Act also includes unincorporated bodies (such as, clubs and charities) and incorporated bodies with an annual turnover of less than €3million.

What legislative changes are taking effect on 1 September 2020?

Similar to CIDRA, the 2019 Act will invalidate basis of contract clauses that have the effect of converting pre-contractual representations into contractual warranties. However, other changes, which will become effective on 1 September that go beyond the scope of CIDRA include:

  • The abolition of the principle of insurable interest as a pre-requisite for making a valid claim;
  • The enhancement of third party rights to take claims against insurers;
  • Limitations on an insurers ability to exercise their subrogation rights against family members, personal contacts and employees of policyholders;
  • Increased claims handling duties for insurers; and
  • A new cooling-off period, which will give a consumer the right to cancel a contract within 14 working days after the date the consumer was informed that the contract was concluded. The cooling-off period does not apply to contracts that are covered by the cancellation rights set out in the European Communities (Distance Marketing of Consumer Financial Services) Regulations 2004, but will apply to corporate bodies that fall within the definition of “consumer” under the 2019 Act.

What provisions of the Act will not be commenced until 1 September 2021?

Commencement of the more burdensome provisions of the 2019 Act have been deferred until 1 September 2021 to allow insurers and product manufacturers sufficient time to update their systems and processes to comply with these new requirements. These provisions are:

  • Section 8, which abolishes the principle of utmost good faith and replaces it with a statutory duty on consumers to answer questions honestly and with reasonable care. While the 2019 Act is similar to CIDRA in that it removes the duty on consumers to disclose any facts that a prudent underwriter would consider material, there are some key differences in the standard of pre-contractual disclosure required from consumer under CIDRA and the 2019 Act. Under CIDRA, consumers are under a duty to take reasonable care not to make a misrepresentation. In this regard, the clarity of the insurer’s question is merely one criteria considered when assessing whether a consumer has taken reasonable care not to make a misrepresentation. However, under the 2019 Act, consumers are required to answer honestly and with reasonable care specific questions on a durable medium that are in plain and clear language. The onus of proving that such questions are in plain and clear language rests with the insurer. Consumers are not required to volunteer information over and above the question asked of them. Consequently, any failure by an insurer to further investigate an incomplete answer could result in the insurer waiving their right to further disclosure from the consumer.
  • Section 9, which introduces proportionate remedies for consumer misrepresentation and distinguishes between three classes of misrepresentation: innocent, negligent and fraudulent. Similar to the concept of “careless misrepresentation” under English law, the remedy available to the insurers under the 2019 Act for negligent misrepresentation depends on what action the insurer would have taken if the misrepresentation had not been made. As with “deliberate or reckless misrepresentation” under CIDRA, an insurer may avoid the contract of insurance under the 2019 Act in cases of “fraudulent misrepresentation”.
  • Section 12, which requires insurers, when issuing renewal notices, to provide details of any premiums paid by the consumer (including mid-term adjustments) and a list of claims (including third part claims) that have been paid for the last five years on foot of the contract.
  • Section 14 (1)-(5), which alters the consumer’s duty of disclosure at renewal stage. Under the 2019 Act, a consumer will only be required to provide updated or additional information at renewal where the insurer specifically requests this information. A further difference between CIDRA and the 2019 Act is that at renewal, under CIDRA, any failure by a consumer to comply with the insurer’s request to confirm or amend particulars previously given is capable of being a misrepresentation. However, under the 2019 Act, at renewal the consumer is merely required to answer honestly and with reasonable care specific questions that have been posed to the consumer by the insurer, such that the onus lies with the insurer to investigate any incomplete answers given by the consumer.

Although the 2019 Act and CIDRA are broadly aligned in their policy objectives, insures with operations in the UK and Ireland should be aware of the differences between the two pieces of legislation when updating their processes and systems to comply with the requirements of the new 2019 Act.

I hope you found this audio briefing helpful. For more information on the 2019 Act, please feel free to contact a member of the Arthur Cox Insurance and Reinsurance team or your usual Arthur Cox contact.


The Arthur Cox podcast series ‘AC Audio’ is a collection of knowledge and insights across a range of practice areas within the firm.

Disclaimer: The contents of this podcast are to assist access to information and do not constitute legal or other advice. Specific advice should be sought in relation to specific cases. If you would like more information on this topic, please contact a member of our team or your usual Arthur Cox contact.