Source: asiainsurancereview.com

The Australian Securities and Investments Commission (ASIC) has updated its information sheets on unfair insurance contract terms protections for consumers and small businesses, following the government’s enactment of the Financial Sector Reform Act 2020.

The changes will take effect from 5 April 2021, that is, the protections will apply to a new insurance contract entered into or renewed on or after 5 April 2021. It will also apply to a term in an insurance contract that is varied on or after 5 April 2021.

ASIC has been working with industry groups and insurers to gauge how insurers are tracking in the lead up to the new protections commencing, to help inform industry about those new obligations, and to discuss about potential contract terms which may raise concerns under the unfair contract terms protections.

In preparation for the unfair contract term protections applying to insurance contracts, ASIC is undertaking targeted supervisory work with industry. The focus of ASIC’s supervisory work is on:

– Terms that allow an insurer to cash settle a claim based on the cost of repair to the insurer

– Terms that are an unnecessary barrier to a consumer lodging a claim

– Terms that reduce the cover offered where compliance with the preconditions is unfeasible; and

– Terms that use an outdated, and therefore inaccurate or restrictive, medical definition.