Richard Marles (Corio, Australian Labor Party, Parliamentary Secretary for Pacific Island Affairs) Share this | Hansard source

I thank the members for Casey and Blair for the contributions that they have made to the debate on the Insurance Contracts Amendment Bill 2013. The measures in the bill modernise and streamline the operation of the Insurance Contracts Act 1984. The government has undertaken extensive consultation on these measures to ensure that the balance between the interests of insurers, the insured and the wider public is maintained. The measures will help ensure a better-functioning, more efficient insurance market that will ultimately benefit the entire Australian community.

Schedule 1 to the bill makes changes to the scope and application of the act. The changes provide that a failure to comply with the duty of utmost good faith is a breach of the act; that contracts of insurance that are entered into or proposed to be entered into for the purpose of workers compensation law continue to be exempt under the act; and that contracts of insurance that include elements of cover that are exempted from the act as well as cover that falls under the act are treated as exempt from the act only in respect of the exempt elements.

Schedule 2 to the bill makes technical changes to provisions in the act regarding the giving of notices, documents and information. These changes will apply to permit insurers to use electronic communication for the purposes of providing notices or documents that are required to be given in writing.

Schedule 3 to the bill provides ASIC with an additional power to intervene in matters arising under the act. The new power is similar to the existing power ASIC has to intervene in proceedings begun by other persons about matters arising under section 1330 of the Corporations Act. It also allows ASIC to be represented in the proceedings by a staff member, a delegate, a solicitor or counsel.

Schedule 4 to the bill changes the way the act deals with particular types of disclosure and misrepresentations, to clarify how the duty of disclosure test is applied. It amends the law to make the duty of disclosure apply on renewal of an eligible contract of insurance and remove the option for insurers to ask catch-all questions in relation to eligible contracts of insurance. It amends the law regarding circumstances in which an insurer must provide an insured with a reminder as to when their duty of disclosure obligations apply. In respect of life insurance contracts, it amends the law so insurers must give a potential life insured who is not the insured under the relevant contract of insurance notice of their duty of disclosure.

Schedule 5 to the bill changes the way the act deals with the remedies for life insurers in cases of misrepresentation and nondisclosure by insureds prior to their entering into life insurance contracts. The changes provide insurers with additional flexibility when seeking remedies for misrepresentation and nondisclosure, by allowing the unbundling of life insurance contracts so that remedies can be applied to each separate type of cover provided within a bundled life insurance contract; by providing a new remedy for misrepresentation and nondisclosure which will apply to all types of life insurance cover, with the exception of death and surrender value cover; and by expanding the range of remedies available to a life insurer where a misrepresentation of an insured involves a misstatement of the date of birth of the insured under the contract.

Schedule 6 to the bill makes technical changes to the act so that individuals who have rights under a contract of insurance—that is, third-party beneficiaries—but who are not the insured have access to particular rights and obligations currently held by those insured.

Schedule 7 to the bill amends the act to provide improved rules for the division of any proceeds that are received from a recovery action when those proceeds are recovered from a third party by an insurer under a right of subrogation.

In conclusion, these measures are another significant step made by the Gillard government to improve Australia's insurance market. While the measures in the bill, by and large, are technical in nature, as a package they will operate to streamline and clarify requirements while ensuring appropriate consumer protections are maintained.

Question agreed to.

Bill read a second time.

Ordered that this bill be reported to the House without amendment.

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