Stakeholders are invited to comment on a draft Regulation Impact Statement on options for extending the unfair contract terms laws to insurance, said Parliamentary Secretary to the Treasurer, David Bradbury.
Provisions protecting consumers against unfair contract terms provisions are located in the Australian Consumer Law and the Australian Securities and Investments Commission Act and were introduced at the Commonwealth level on 1 July 2010.
Insurance contracts are not currently covered by unfair contracts terms law, with some consumer protection provisions instead built into the Insurance Contracts Act.
"Against the backdrop of last summer's floods in Queensland, some consumers had expressed concern that terms in their insurance contract were unfair and that the Insurance Contracts Act did not provide them with adequate protection," said Mr Bradbury.
"Following on from these concerns, I convened a roundtable of insurance industry and consumer stakeholders earlier this year to find a way forward on this issue.
"In its final report,the Natural Disaster Insurance Review also recommended that the unfair contract terms laws be extended to cover insurance contracts.
"In response to these consultations, I am today releasing a draft Regulation Impact Statement for public consultation on options for the extension of unfair contract terms laws to insurance.
"Insurance is a complex area of the economy and any changes to the regulatory environment need to be mindful of this complexity. However, consumers also deserve certainty in the protections they have when entering into contracts and in this respect insurance should not be treated differently from any other financial service that consumers use."
The Consultation Draft RIS, Unfair terms in insurance contracts, can be found at www.treasury.gov.au. Submissions will close on 17 February 2012.
12 December 2011