The Insurance Contracts Amendments Bill was finally passed last week after a decade of reviews and delays, and while it has been welcomed by the life industry, it may require greater scrutiny from advisers.
Previously, an insured client had no duty of disclosure imposed on them by the legislation, says John Myatt, head of the Insurance & Financial Services practice group at TurksLegal. “The Bill makes it clear for the first time that a life insurance policy can be cancelled in the event of a fraudulent claim.”
“The remedies for non- disclosure and misrepresentation that apply to group life insurance schemes were also poorly drafted and hard to interpret and literally millions of Australians are now covered under these contracts,” says Myatt.
ASIC will also get greater power from the Bill. It will be allowed to intervene in legal proceedings involving matters under the Act. “The duty of utmost good faith imposed by sections 13 and 14 of the Act will now expressly extend to third party beneficiaries of policies and to the handling of claims,” says Myatt. “A breach of the duty will also become a matter that may impact on a provider’s Australian Financial Services Licence, so we would expect insurers to become even more vigilant of the compliance issues that are already at the heart of good claims management.”
Myatt says that Turks have been involved in the consultation process, and the reforms will allow the industry to deliver better targeted and fairer responses to the problem of fraud.
Bradbury and Cormann praised for TASA action
AIA changes widen scope for business
Risk now clients’ problem