High Court of Justice, O’Donoghue v. Office of the Financial Services and Pensions Ombudsman  IEHC 581 – an ombudsman unsympathetic to intermediaries?
In Ireland, the Financial Services and Pensions Ombudsman (FSPO) was established in 2017 to unburden the courts and to act in cases between individuals and insurance professionals, including brokers. The case below illustrates one of its decisions.
Through an intermediary, an insured took out a policy to insure a residential apartment. Several months later, following a burglary, the policyholder submitted a claim to the insurer. The insurer declined cover on the grounds that the insured had not correctly disclosed the risk when he took out the policy because he had stated in the proposal form that the property was regularly occupied, which was in fact not the case. The policyholder then claimed that the broker was liable on the grounds that he had informed the broker that the building was usually unoccupied, that he thought he had taken out a policy to that effect and that he had paid a premium calculated on that basis. Finally, he alleged that the documentation had been falsified by the intermediary before it was forwarded to the insurer.
The matter was brought before the Financial Services and Pensions Ombudsman (FSPO), the Irish office for mediation, which held the broker liable for having failed to provide the insured with a policy tailored to his needs and requirements. However, it held that the insurance questionnaire had not been altered by the intermediary after it had been submitted, contrary to the policyholder’s contention.
The ombudsman held that the broker owed a duty to formally verify the information provided by the insured, a position that is relatively harsh vis-à-vis the intermediary since it was the policyholder himself who had completed the questionnaire and reviewed the terms and conditions of the policy.
In Ireland, access to the courts is very expensive, which is why many cases have a settlement outside of court. As a result, disputes involving intermediaries have been redirected to the insurance ombudsman for several years, and its powers were modified in 2017 by the Financial Services and Pensions Ombudsman Act.
Furthermore, challenging a decision of the FSPO would certainly be very difficult – if not impossible – in the event the insured wishes to have it revised by the courts. The insured would have to prove that the decision was the product of a grave and serious error, or a series of such errors. Therefore, an appeal will only be allowed in exceptional circumstances because the decisions of the FSPO are usually considered final.