The Insurance Contracts Amendment Act 2013 (Cth) (Amendment Act), which made various changes to the Insurance Contracts Act 1984 (Cth) (ICA), was assented to in 2013. Some of the amendments took effect last year. On 28 June 2014 (and 28 December 2015), further amendments will come into effect. This note considers the amendments coming into effect on 28 June 2014.
Amendments to remedies of life insurers
Section 29 of the ICA sets out remedies for life insurers where an insured either misrepresented or did not disclose matters that should have been disclosed prior to entering into the life insurance contract. An additional remedy will be inserted into s 29 that will enable an insurer to be put in the position that they would have been in if a misrepresentation or a failure to comply with the duty of disclosure had not occurred. However, this remedy will not apply to life insurance contracts that contain a surrender value or provide cover in respect of the death of a life insured.
Amendments which affect the rights of third party beneficiaries
Amendments will be made to ICA sections 41, 48, 48A, 48AA and 51 so that:
- a person who is not a party to an insurance contract but is specified or referred to in it as a person to whom the benefit of the cover provided by the contract extends (third party beneficiary) will have access to particular rights and obligations currently held by insureds;
- an insurer has the same defences in a recovery action brought by a third party beneficiary as the insurer would have in an action by the insured, including defences relating to the conduct of the insured (whether it is pre or post contractual conduct); and
- third parties with damages claims against an insured or third party beneficiary who has died or cannot be found may recover directly against the insurer.
Amendments in relation to contracts of life insurance under a superannuation or other group scheme
Amendments will be made to ICA sections 4, 11, 23, 26, 32 and 32A so that:
- remedies for misrepresentation and non disclosure are available in relation to contracts of life insurance that are offered as part of a group scheme that is unrelated to superannuation; and
- remedies are available in respect of any misrepresentation or non-disclosure that occurs between the time an insured became a member of a superannuation or other group scheme and the time when the life insurance cover takes effect.
Application of the amendments – new and existing contracts
The Amendment Act includes a number of transitorial provisions that set out which amendments apply only to new contracts made on or after 28 June 2014, and which apply to new, existing or renewed contracts.