Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

The Minister of State referred to amendments Nos. 20 and 21. I might respond to them all.

Amendments Nos. 17 to 19, inclusive, are drafting amendments. I have no issue with them. They involve changes to terms such as "consumer" and substituting "an insurance contract" with "contract of insurance".

Section 18 is important as it deals with warranties. These are the obligations by which a consumer must abide. We accepted earlier amendments on the definition of "continuing restrictive conditions". These warranties can result in an entire claim being voided. The Minister of State gave a good example from the LRC report. An insurance policy may require a policyholder to have a burglar alarm in his or her home. The example is if the house burns down, be it due to lightning or an electrical fault, and the assessor notes there was no burglar alarm or it was a class C alarm as opposed to a class B alarm. While it had nothing to do with the fire, the insurance company would be within its rights legally, but not morally, not to pay out on any of the claim. The family then has lost all its possessions, even if it paid insurance for a long time.

Section 18 makes it clear that such circumstances will not be permitted in the future. It states that, where there is a breach of warranty, that it is only for that period and that section of the loss that will be suspended.

I do not have an issue with amendment No. 20 but I am not sure if it is required because section 18(5)(b) states any breach "shall only suspend the liability of the insurer in respect of that particular type of loss, or loss at a particular time or loss in a particular location". In the case of a burglar alarm, if it is not operational and the house is insured for theft, it could be argued that it was not covered against theft, but if lightening strikes the house and it is burned down the insurance company cannot get out of paying the liability. This section is really important. As I said, I have no issue with the amendments. They tighten up and clarify the legislation. It is important on the legal advice that is available to the Minister that there is clarity because we do not want insurance companies to be able to wriggle out of their obligations to pay a claim as a result of an action that is negligible or has no impact in regard to the damage caused to the property.

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