On 20 June 2013 the Insurance Contracts Amendment Bill was passed by the Senate. The Bill gives effect to a number of recommendations made in 2004 by the Review Panel appointed by the Howard government to review the Insurance Contracts Act 1984 (Cth) (the Act).
The Bill now awaits royal assent. Provisions of the Bill will commence at different times calculated by reference to the date of assent.
Amendments which are relevant to general commercial insurance affect the following areas.
- Duty of utmost good faith – When an insurer breaches the duty of utmost good faith, ASIC may now bring representative proceedings against the insurer or exercise its power to vary, suspend, cancel or impose conditions on an insurer’s Australian financial services licence. For more information click here.
- Third party beneficiaries – The Bill gives third party beneficiaries particular rights and obligations of insureds. For more information click here.
- Duty of disclosure – The Bill imposes additional obligations upon insurers when advising insureds about the duty of disclosure. For more information click here.
- Subrogation – The Bill introduces new rules for how money recovered from a third party by an insurer under a right of subrogation should be divided between insurer and insured or third party beneficiary. For more information click here.
- ASIC’s powers – The Bill allows ASIC to intervene and be represented in proceedings involving matters arising under the Act. For more information click here.
- Electronic communication – Once amendments are made to the Electronic Transactions Regulations 2000, written notices under the Act will be permitted to be given electronically. For more information click here.