Consumer Insurance (Disclosure & Representations) Act 2012

Question 1

When did CIDRA come into force?

Answer 1

6th April 2013

Question 2

What does CIDRA relate to?

Answer 2

Consumer only, not commercial.

Question 3

What did CIDRA replace?

Answer 3

• Utmost good faith principle
• Replaced duty on consumers to disclose material facts that a prudent UW would take into account when calculation premiums or policy terms.

Question 4

Utmost good faith principle was replaced by what duty under CIDRA?

Answer 4

• The new duty is now to take reasonable care NOT to make a misrepresentation
• Test, was misrepresentation deliberate, reckless or careless?

Question 5

Under CIDRA, what if insured makes a misrepresentation that isn’t deliberate, reckless or careless?

Answer 5

• Insurer has no right to reject or restrict payment of a claim, even if they consider it to be material.

Question 6

CIDRA defines a consumer as?

Answer 6

S.1; an individual who enters into an insurance contract-
“wholly or mainly for purposes unrelated to the individuals trade, business or profession.”

Question 7

CIDRA section 2 sets out consumers duties of disclosure misrep?

Answer 7

1. Duty of consumer to take reasonable care not to make a misrepresentation.
2. Failure to comply with Insurers request to confirm or amend particulars previously given is capable of being a misrep for the purposes of this act.

Question 8

Under CIDRA, there are 3 circs in which a misrepresentation may arise in consumer insurance contracts;

Answer 8

1. In response to a Q asked by an Insurer
2. In info volunteered by the Insured
3. By failure at renewal of policy to advise insurer of any changes to the risk in response to a Q asking for such info.

Question 9

What matters may need to be taken into account in considering all relevant circs (5)?

Answer 9

a) type of consumer insurance contract in Q & it’s target market
b) any relevant explanatory material or publicity produced or authorised by the insurer.
c) how clear & specific Insurer’s Q’s were
d) in failure to respond to Insurer’s Q in relation to renewal or variation, how clearly did insurer communicate the importance of answering this Q?
e) if an agent was acting on behalf of the insured

Question 10

Where misrep is careless & insurer would not have entered into policy on any terms?

Answer 10

• Can avoid policy but MUST return all premiums paid.

Question 11

Where misrep is careless & insurer would have entered into contract on diff terms (not relating to premium)?

Answer 11

• Contract to be treated as though those terms have been applied

Question 12

Where misrep is careless & insurer would have entered into contract on same or different terms but would have applied higher premium?

Answer 12

• Any claim may be reduced in the same proportion as the premium actually charged.
• Premium charged/Higher premium x 100.

Question 13

If a qualifying misrep was deliberate or reckless, the insurer may -

Answer 13

• Avoid the contract and need not return any premiums (except if that would be unfair to the PH)

Question 14

Careless Misrep - Treatment of Contract for Future?

Answer 14

• Doesn’t relate to any outstanding claim
• Insurer can give notice to that effect to consumer or
• Terminate contract by giving notice to the consumer
• Insurer can’t terminate if wholly or mainly one off life insurance
• If any party terminates contract under this section, Insurer must return all premiums.