Unfair contract laws to be extended to insurance
Many of you would be unaware that existing legislation dealing with unfair contracts, does not apply to insurance.
Given the generally held distrust of insurers who “use the small print” to escape from paying genuine claims, some people would say that is a position which shouldn’t continue…and the Government agrees.
Following an announcement that a proposals paper has been prepared to extend unfair contract provisions for consumers and SMEs to insurance policies, the relevant Minister, Kelly O’Dwyer, believes that better protection is long overdue.
She 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 lobby group for the insurance companies… the Insurance Council of Australia…have stated that they have “serious concerns” about the proposal, but many people would argue that the same protections from unfair contracts which exist for other financial products and services, should apply to insurance.
“While the ICA will work carefully through the proposed model with members… on an initial reading, the Governments proposal has profound implications for insurance contracts, the scope of cover offered and the pricing of insurance,” the group CEO said. “If implemented, it would cause insurers to fundamentally review their contracts and reassess their pricing”.
While it’s true that the introduction of the law to other providers of financial services, caused a substantial review of their fundamental contractual terms, the recent Financial Services Royal commission has shone the light on some appalling actions by the Banks, and while previous reviews of the insurance industry has not found any compelling evidence that introduction of these laws into the industry would significantly benefit consumers and SMEs, in the increasing age of transparency, it is hard to argue against its extension to insurance.
