Inroducing the Insurance Contracts Amendment (Unfair Terms) Bill 2013 - (Australia)


Following on from our recent entry, the draft Insurance Contracts Amendment (Unfair Terms) Bill 2013 has now been released for public consultation. It aims to 'give consumers protection against unfair contract terms in general insurance contracts.' This draft Bill seeks to amend the Insurance Contracts Act 1984 (Cth) to incorporate an unfair contract terms regime which will apply to general insurance contracts. The regime is similar to that which already applies to other financial products or services in the Australian Securities and Investments Commission Act 2001 (Cth).

To read the draft Bill, click here. To read the Explanatory Memorandum, click here.

It will be interesting to see how the public reacts to this draft Bill. After all, the existing provisions of the Insurance Contracts Act 1984 (Cth) - particularly section 13 (regarding utmost good faith) were supposed to 'provide sufficient inducement to insurers and their advisers to be careful in drafting their policies and to act fairly in relying on their strict terms' (Australian Law Reform Commission Report 20, Insurance Contracts). In light of this, it has been suggested that an unfair contract terms regime would not provide any further protection for insurance consumers, yet may actually increase administrative or regulatory costs, along with the number of insurance related disputes - thereby resulting in an increase in insurance premiums. That would obviously not be good news for consumers.

Do you have a view? If so, the Treasury welcomes any comments/submissions (which are due by 31 May 2013). For further details, click here.

The Insurance Flashlight team will continue to report on these proposed amendments, as further developments occur.


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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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