Reviews of unfair contract terms
29 Jan 2018
There is pressure on both sides of the Tasman, from Consumer NZ and the Australian Federal Government, to review the exemption for insurance from laws covering unfair contract terms.
Canberra has ruled out intervening directly in the insurance market, and is instead focusing on accountability and improving consumer understanding.
Suncorp Insurance CEO Gary Dransfield warns that any changes to unfair contract terms “need to be developed carefully and in close consultation with the industry”. He says without consultation there is a risk that customer experiences would be jeopardised and unnecessary complexity added to insurance processes.
The Australian Government has asked Treasury to assess whether legislation should be amended to require insurers to show previous-year premiums on renewal notices and explain rises when requested by a policyholder.
The Senate inquiry and the Government were persuaded that insurance should be covered by unfair contract term provisions. Proposals on this matter will be released early this year, despite arguments the sector is covered by “utmost good faith” obligations and has more than enough oversight.
While the industry has campaigned against being included in the unfair contract terms provisions, the move is no surprise after it was flagged in a review by government advisory group Consumer Affairs Australia and New Zealand.
ICA says it has been discussing the issue with various parties. It says any changes need examination and consultation so they are not detrimental to customer experiences, competition, product differentiation or pricing.
These moves are similar to Consumer NZ proposals for changes to the insurance industry here. See our story last week "Five fixes required".