Consumer Action Law Centre and Insurance Law Service have welcomed the introduction of a bill into Federal Parliament that, if passed, will mean that unfair contract term laws will be extended to general insurance contracts. Protections against unfair terms have applied in all other consumer sectors nationally since 1 January 2011, and the decision to extend protection to insurance represents a significant advance in national consumer protection.
‘The ending of this unnecessary exception that the insurance industry has enjoyed is an urgent reform and should be passed before this Government rises,” said Gerard Brody, CEO of Consumer Action Law Centre.
‘We acknowledge the willingness of the Insurance Council of Australia to work with consumer groups on these necessary reforms during the initial consultation and we call on it to actively support this long overdue reform.’
Following the devastating natural disasters that hit many Australians in early 2011, and the number of consumer disputes that followed, consumer groups developed a twelve point plan to improve consumer protection in insurance. One of the key protections sought was national unfair terms protections.
‘Too often we see exclusions in contract terms that mean claims are rejected when an insured event occurs. For example, we’ve seen terms which place unreasonable burdens on those involved in motor vehicle accidents to identify other parties at fault when those parties are uninsured. This can be very difficult in some circumstances—particularly if an at fault driver doesn’t cooperate—and can mean drivers not at fault miss out on insurance claims.
‘If enacted, this legislation should encourage insurers to revisit their contracts and ensure terms are balanced and fair,’ said Mr Brody.
The need to extend unfair terms protections to all consumer products and services was first recognised by the Productivity Commission in 2008, and many expert inquiries have recommended extension of protections to insurance, including a Senate Inquiry in 2010 and the National Disaster Insurance Review of 2011.