The report of the first phase of the Review of the Insurance Contracts Act 1984 was released today by the Minister for Revenue and Assistant Treasurer, Senator Helen Coonan, and the Parliamentary Secretary to the Treasurer, Ross Cameron MP.
The Review is being conducted by former Chairman of the Australian Securities and Investments Commission, Mr Alan Cameron A.M. and Ms Nancy Milne, a partner at Clayton Utz specialising in insurance law.
Following concerns raised at the sixth Ministerial Meeting on Insurance Issues in Adelaide in August that section 54 of the Act may be adversely impacting on the cost and availability of professional indemnity and similar types of insurance, the reviewers were asked to report on that particular section by 31 October 2003.
The Reviewers will continue to consult widely and deliver the remainder of the Review to the Government by 31 May 2004.
The Review emphasises that section 54 operates as intended in relation to standard 'occurrence' based policies. Therefore the report's focus is on the impact of section 54 on `claims made' and `claims made and notified' policies.
"The issues surrounding Section 54 are complex and not confined to that section alone," Senator Coonan said.
"The Reviewers have made a number of recommendations to reform Section 54 which will be carefully considered by the Government and which will benefit from further input from the insurance industry and other stakeholders.
"Any amendments need to be developed carefully and will be released for public exposure as part of the Review process. It is important claims based insurance is available and affordable, particularly for professionals."
"The recommendations in the report offer a sensible approach to dealing with the problems that judicial interpretation of section 54 has caused for indemnity insurance classes," Ross Cameron said.
"Moreover, the recommendations maintain a balance between the interests of insurers, insureds and third party claimants.
"We thank Alan Cameron and Nancy Milne for their work on the review and also thank those who contributed to the review and took time to meet with the reviewers."
The Government has asked the Reviewers to undertake further consultations with stakeholders on the proposed legislative amendments, once they are available in draft form.
Following this further public consultation, the amendments will be introduced into Parliament early in the parliamentary session next year.
A copy of the Report on section 54 will be sent to all contributors and an electronic version will be available on the Review of Insurance Contracts Act website at icareview.treasury.gov.au/content/default.asp
SYDNEY
18 November 2003
Contact:
Rachel Merton - Ross Cameron's office - (02) 9689 2833 or 0417 418 460
Jane McMillan - Senator Coonan's office - (02) 9223 4388 or 0438 690 305
Michael Rosser - Review Secretariat, 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:
- product, regulatory and other developments in the financial services industry (particularly the insurance sector) since the Act was enacted; and
- judicial interpretation of the Act.
- 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;
- Whether any amendments are warranted in order to remove ambiguity and more clearly express the intent of the Act; and
- 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.