.jpg)
With less than a month until the federal government closes submissions for the proposals paper on applying unfair contract terms to insurance contracts, Australia’s peak industry body has expressed “serious concerns” with the proposed model to implement the policy.
The proposed model, announced in December, seeks to ensure that consumers and small businesses that buy insurance have the same access to protection from unfair terms in insurance contracts as they do for other contracts for financial products and services.
In a statement, Rob Whelan, CEO of Insurance Council of Australia (ICA) said that on an initial reading, the proposed model “has profound implications for insurance contracts, the scope of cover offered, and the pricing of insurance.”
“If implemented, it would cause insurers to fundamentally review their contracts and reassess their pricing,” Whelan said. “The model under discussion would change the nature of the industry and the risks that insurers are prepared to underwrite. This is not consistent with the government’s announcement that it would apply UCT protections to insurance contracts in line with other sectors of the economy.”
Whelan said there has been “no compelling evidence” to suggest the extension of UCT protections to general insurance contracts will benefit consumers, and cited the argument that “consumers already have sufficient protections through the Insurance Contracts Act, the Corporations Act, federal and state fair trading laws and the General Insurance Code of Practice.”
However, Whelan said ICA “has been willing to work with stakeholders on developing outcomes that are considered reasonable to all parties” and “has also been working on improving product disclosure to help customers during the purchasing process.”
The council said it will respond to the proposals paper and will continue to carefully work through the proposed models with members.
Stakeholders may submit responses to the consultation until July 27, electronically or by post.
