Insurers have waited patiently since the 2013 amendments to the Insurance Contracts Act 1984 (Cth) (the Act) for guidance on changes to duty of disclosure notices necessitated by amendments to sections 21, 21A and 22, together with the new section 21B (applying to renewals), of the Act.
With the deadline for implementation of the new notices looming on 28 December this year, guidance was finally provided when the Insurance Contracts Amendment Regulation 2015 (No.1) (Cth) came into effect on 21 April 2015.
The standard wording for general insurance contracts has only been slightly altered. The recommended wording for contracts of life insurance has been amplified. It is important to note that the regulations only provide a recommended wording and insurers are free to “clearly inform” insureds in writing of the nature and effect of the duty of disclosure, as required by section 22, as they see fit. That said, in the interests of caution most insurers closely follow the recommended wording.
Although in some respects the duty of disclosure procedure has been simplified, particularly for renewals upon the implementation of section 21B, this has introduced multiple variants of the duty of disclosure notice applying variously at the first time an insured enters into a contract, renewal and upon variation, extension or reinstatement. This may lead to complications where insurers need to determine which disclosure notice is appropriate. Some insurers may find it easier to simply explain the various options at all times.
Guidance was also provided on the new reminder notices, required by subsection 22(3) where an insurer accepts an offer or makes a counter-offer two months after the insured’s most recent disclosure. This disclosure obligation only applies to “new matters”. However, the form of the reminder does not appear to accommodate the new renewal procedures under section 21B.
Insurers now have the remainder of the year (until 28 December 2015) to consider and implement the recommendations. Early consideration of the changes is suggested to ensure all procedural and other systems requirements are addressed in time.