Earlier this week, the government released a proposals paper setting out a model for extending UCT protections to insurance contracts.
The proposed model involves amending section 15 of the Insurance Contracts Act 1984 (IC Act) to allow the UCT laws 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.
Further, the model tailors the UCT laws in the ASIC Act to accommodate specific features of insurance contracts.
Speaking to Public Accountant, the Institute of Public Accountants general manager of technical policy, Tony Greco, said individual and small businesses in particular have difficulties understanding the contracts they enter into.
“It comes home to haunt consumers when any adverse clauses limit any compensation at the time they most need,” he said.
“Any reforms will put insurers on notice to ensure that the contract accurately reflects the cover agreed with the insurer.
“Appropriate remedies when a consumer suffers detriment as a result of terms in the contract which are unfair will be considered as part of future reforms which is a good thing as insurance is an important process to protect assets and limit losses.”
Minister for Revenue and Financial Services Kelly O’Dwyer said the government is committed to strengthening protections for consumers and small businesses who purchase standard form insurance contracts.
“Consumers and small businesses who enter into standard from insurance contracts should have confidence that the contract accurately reflects the cover agreed with the insurer,” Ms O’Dwyer said.
Submissions to the proposals paper close on 27 July.
