Most readers would know that proposed amendments to the Insurance Contracts Act have been kicking around in the backblocks of federal parliament for a number of years.  Much has been written about them but they are yet to become law.

Now there is a further amendment proposed… and it isn’t pretty.  The Senate has decided that there are commonly ‘unfair’ terms in insurance policies and that consumers have insufficient protection from them at law.  Accordingly it is proposed that for ‘standard form’ policies – probably motor, householders, caravan, boat, etc – a judge will be able to deem reliance on an ‘unfair’ term in a policy to be a breach by the insurer of the duty of utmost good faith.  The onus will be on the insurer to demonstrate that the term is not unfair, by proving that the term is reasonably necessary to protect the insurer’s legitimate interests.

It sounds like a customer who is unhappy with rejection of a claim based on a provision of a policy will be able to call it ‘unfair’.  Then the insurer would have the onus of proving that it isn’t unfair.  And a judge or FOS would have the ability to declare that it is.

It will be interesting to see how ‘unfair’ ends up being defined in the proposed legislation.  Everyone has a different view about what is and what isn’t ‘fair’… that is why we have laws.