The regulation (Insurance Contracts Amendment Regulation 2015 (No. 1) (Cth)) setting out the new recommended wording for notifying customers of their duty of disclosure under s.22 of the Insurance Contract Act 1984 (Cth) came into effect on 21 April 2015. All contracts of insurance entered into from 28 December 2015 are required to meet the new requirements of section 22. For contracts entered into prior to 28 December 2015, insurers may continue to use the wording set out in the previous regulation.
Whilst the recommended wording for general insurance contracts is only a minor shift from the existing wording, the recommended wording for contracts of life insurance has been bolstered.
In addition to the above, insurers will also have to take the following steps for policies entered into from 28 December 2015:
- If an insurer has notified a customer of their duty of disclosure as required by s.22(1), but as a result of dealings between the insurer and the customer, the insurer’s acceptance of the customer’s offer to acquire the product, or the insurer’s-counter offer to enter into another contract of insurance with the customer, occurs 2 months after the original notification of the duty of disclosure to the customer, a reminder notification must be given to the customer by the insurer at the time the acceptance or counter-offer is made. The form of this reminder will be contained in Schedule 1B of the regulations. The disclosure obligation arising out of the reminder notification only apply to ‘new matters’ arising after the most recent disclosure by the customer.
- Life insurers will also be required to provide a written notice of the duty of disclosure (in the form set out Schedule 1A of the regulations) to individuals who will be covered under a contract of life insurance notwithstanding that they will not be primary the customer under the contract of life insurance.
The purpose of these amendments is to clarify the duty of disclosure for insureds. In practice, this is unlikely to cause a significant shift in non-disclosure disputes between insureds and insurers. As always, evidence of the communication of the duty to the insured will be important for insurers.