The Minister for Revenue and Assistant Treasurer, Senator Helen Coonan, and Parliamentary Secretary to the Treasurer, Senator Ian Campbell, today announced a review of the Insurance Contracts Act 1984.
The review is aimed at ensuring the Act continues to meet its original consumer protection objectives and does not discourage insurers from writing policies in Australia.
"The Insurance Contracts Act was enacted nearly 20 years ago," Senator Campbell said.
"It was originally introduced as a result of recommendations of the Australian Law Reform Commission and was designed to protect consumers against the harsh outcomes arising from application of the common law principles that applied to insurance contracts up until that time."
Senator Coonan said: "Over the past 20 years, the Act has been subject to judicial interpretation and the insurance environment has changed.
"In the context of the debate on the affordability and availability of indemnity classes of insurance - including public liability and professional indemnity - particular concern has been expressed about the operation of section 54 of the Act.
"Insurers contend that judicial interpretation of section 54 presents an obstacle to more insurers entering the Australian market for liability insurance, thereby adding to the cost and reducing the availability of cover."
Mr Alan Cameron AM (as Chair) and Ms Nancy Milne will conduct the review.
Mr Cameron has extensive experience in both the public and private sector, including eight years as Chairman of the Australian Securities and Investments Commission and its predecessor, the Australian Securities Commission. Ms Milne is a specialist insurance and reinsurance lawyer and a partner with Clayton Utz. The depth and breadth of the experience possessed by the review panel will enable it to deliver well-considered recommendations for any amendments to the Act.
Given the particular concerns about section 54 of the Act, the panel has been asked to report to Government on this provision by no later than 31 October. The balance of the panel's report is due by 31 May 2004.
Further information relating to the review will be available from the Review's website at http://icareview.treasury.gov.au
CANBERRA
10 September 2003
Contact:
Wayne Grant - Senator Campbell's office - (02) 6277 3955 or 0407 845 280
Jane McMillan - Senator Coonan's office - (02) 6277 7360 or 0408 762 216
Michael Rosser - Corporations and Financial Services Division, The Treasury,
(02) 6263 3962
REVIEW OF THE INSURANCE CONTRACTS ACT 1984
Terms of reference
The review of the operation of the Insurance Contracts Act 1984 (the Act) is to be conducted having regard to the following:
- Whether the rights and obligations of insurers and insureds (including persons seeking insurance) under the Act continue to be appropriate, including in light of:
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product, regulatory and other developments in the financial services industry (particularly the insurance sector) since the Act was enacted; and
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judicial interpretation of the Act.
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Whether any amendments to the Act are required to take account of the matters set out in item 1, and whether there are any deficiencies in the Act, such as aspects of the relationship between insurers and insureds that are not adequately covered;
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Whether any amendments are warranted in order to remove ambiguity and more clearly express the intent of the Act; and
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Any other matters relating to the Act which the reviewers consider it appropriate to examine.
A written report on the findings of the review is to be provided to the Government by 31 May 2004.
Given concerns that section 54 of the Act may be adversely impacting on the cost and availability of professional indemnity and similar types of insurance, a preliminary report on urgent issues relating to that section is to be provided to the Government by 31 October 2003, in order that any resultant legislative amendments can be implemented at the earliest available opportunity.