Submission: Extending unfair contract terms protections to insurance contracts
The case for extending unfair contract terms (UCT) laws to insurance contracts is clear.
The insurance industry is virtually the only industry enjoying an exemption from the economy-wide UCT regime. There is clear evidence that this loophole should be closed. Public scandals in life insurance and add-on insurance, as well as the experiences of many people who Consumer Action has assisted, all point to the need for the UCT regime to cover insurance. This reform has been recommended in three separate inquiries and reviews over the past year.
Consumer Action strongly supports many elements of Treasury’s proposal. It strikes the right balance of fairness and captures many of the key issues experienced by consumers. The extension of the Australian Securities & Investments Act (ASIC Act) regime to insurers is a consistent and sound approach. We welcome key elements of the proposal, such as the meaning of unfair, the coverage of a broad range of standard form consumer contracts and the inclusion of third-party beneficiaries. We have also provided comment on where the regime should be strengthened. This includes applying the fairness test to excesses and ensuring an effective transition for life insurance contracts.
Read the full submission here [PDF].
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