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Thursday, 14 March 2013
Page: 2107

Mr RIPOLL (OxleyParliamentary Secretary to the Treasurer) (09:53): I move:

That this bill be now read a second time.

Having a safe, efficient and well-functioning insurance market is vital for all Australians. Insurance enables people and organisations to participate in social and economic activities that they otherwise would not be able to engage in, as they are able to price and transfer risks associated with those activities and with other aspects of their lives.

The important role that insurance plays in Australian society has become even more evident in the past few years with the devastating impact of natural disasters on so many lives.

In recognising the critical role insurance plays and the impact that insurance has on families and businesses the government has taken and continues to take a number of steps to improve the insurance market in Australia.

In this regard, on 23 November 2011 the government introduced the Insurance Contracts Amendment Bill 2011 into parliament. The bill received royal assent on 15 April 2012. The 2012 act introduced the framework for a standard definition of flood for home building, home contents, small business and strata title body corporate insurance contracts and for the provision of a key facts sheet for home building and home contents insurance policies.

During 2012, regulations to give effect to these two measures were made and I am pleased to say that a significant number of insurers have adopted the standard definition early. This measure in particular ensures that Australians can rely on a common understanding of what flood actually means in these type of insurance contracts.

This bill, the Insurance Contracts Amendment Bill 2013, is yet another example of how the Gillard government is improving the insurance market in Australia. The law governing contracts of insurance has a direct influence on the effectiveness and efficiency of the insurance market.

This bill has been developed over a long period. Its history began back in September 2003, when a review panel comprising Mr Alan Cameron AM and Ms Nancy Milne was established to embark on a comprehensive review of the act.

The review panel’s final report was released in 2004. The report noted that the Insurance Contracts Act 1984, which is the primary source of laws regulating the rights and obligations of insurers, insureds and relevant third parties, had generally been operating satisfactorily to the benefit of insurers and insureds. However, the review panel found that some changes would be beneficial given the passage of time from the act's original enactment. Consequently, the review panel made some recommendations to give effect to the beneficial changes that they had identified in the review. The review panel also recommended that further consultations should be undertaken on the details of any proposed amendments to give effect to their recommendations.

In 2010 after extended consultation with industry and consumer groups, the Insurance Contracts Amendment Bill 2010 was introduced into parliament. While the 2010 bill passed the House of Representatives, due to the calling of the 2010 federal election the bill lapsed.

On the government’s return, it was decided that it was appropriate to consult further with key stakeholders to ensure that the amendments to the act struck an appropriate balance between providing certainty for insurers and ensuring that insureds are able to obtain appropriate outcomes under the act. Through this engagement, some additional refinements have been made to the proposed amendments to the act. These refinements further add to the beneficial nature of the amendments to the act.

The government appreciates the constructive and thoughtful way that consumer representatives and industry have worked closely together throughout the development of the amendments to the act.

The bill includes measures that will:

remove impediments to the use of electronic communication for statutory notices and documents;

make the duty of disclosure easier for consumers to understand and comply with, especially at renewal of household/domestic insurance contracts;

make the remedies in respect of life insurance contracts more flexible and suited to modern life insurance products;

clarify the rights and obligations of persons named in contracts as having the benefit of cover, but who are not parties themselves; and

clarify what types of contracts are exempt from its operation.

Although many of the amendments are technical adjustments to the act rather than significant changes to the framework of the act, as a package they will operate to streamline and clarify requirements while maintaining appropriate consumer protections.

The government is also in the process of developing draft legislation to extend the unfair contract terms laws to general insurance. This will ensure that the protections against unfair contract terms that are enshrined in Australia's consumer protection legislation will also apply to general insurance contracts, which have until now been excluded.

In conclusion, this bill is yet another significant step made by the Gillard government in improving the insurance market in Australia. This bill provides for a package of improvements and efficiencies to how the act operates, while maintaining the right balance that the act aims to strike between the interests of insurers, insureds and the wider public. This bill will help ensure a better functioning, more efficient insurance market that will ultimately benefit the entire Australian community.

Debate adjourned.