MinterEllison
  July 24, 2018 - Australia

Consultation on a Proposed Model to Extend Unfair Contract Terms (UCT) Protections to Insurance Contracts - Australia
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Earlier this year, the government released a proposal paper: Extending Unfair Contract Terms Protections to Insurance Contracts outlining a model to extend unfair contract term (UCT) provisions to insurance contracts regulated under the Insurance Contracts Act 1984 (Cth) (IC Act) for consultation.
The consultation period closes on 27 July.

A high level summary of the proposed model is below.


On 27 June, the government released a proposal paper: Extending Unfair Contract Terms Protections to Insurance Contracts outlining a model to extend unfair contract term (UCT) provisions to insurance contracts regulated under the Insurance Contracts Act 1984 (Cth) (IC Act) for consultation.
The consultation period closes on 27 July.

Purpose of the proposed changes

In announcing the consultation, Minister for Revenue and Financial Services Kelly O'Dwyer said: 'Consumers and small businesses who enter into standard form insurance contracts should have confidence that the contract accurately reflects the cover agreed with the insurer. They should also have appropriate remedies when they suffer detriment as a result of terms in the contract which are unfair…The [proposed] model ensures that consumers and small businesses who purchase insurance are provided with the same protections that are already available for other financial products and services while ensuring the laws are appropriately tailored for the specific features of insurance contracts'.
The proposal paper adds that, if implemented, the proposed change will bring Australia into alignment with comparable jurisdictions including the UK, The EU and NZ where insurance contracts are not excluded from those jurisdictions' UCT laws.

Proposed Model: Key Points

The proposed model involves:

  1. Amending section 15 of the IC Act to allow the UCT provisions in the Australian Securities and Investments Commission Act 2001 (ASIC Act) to apply to insurance contracts regulated by the IC Act, which includes both general and life insurance contracts.
  2. Tailoring the application of the UCT provisions to 'take account of the specific features of insurance where necessary'. More specifically, it's proposed that:

Other options

The proposal paper notes that in addition to the proposed model, other options also exist for extending the UCT laws to insurance contracts regulated by the IC Act. These options include enhancing the existing IC Act remedies and introducing the existing UCT laws into the IC Act. The proposal paper also seeks feedback on these other options.

Proposed timeline

It's proposed that a 12 month transitional period will be provided before the new provisions take effect. After the transition, it is proposed that the UCT provisions will apply as follows:




Read full article at: https://www.minterellison.com/articles/consultation-on-extending-unfair-contract-terms-protections-to-insurance-contracts