By: Peter Leman and Michael Cavanaugh

The Contracts of Insurance Bill continues its progress. We previously reported on its introduction to Parliament here. Most recently, the Select Committee has considered public submissions and produced its report, and the Bill began its second reading.

At its second reading last week, the Government commended to the House the Bill with changes recommended by the Select Committee. The most high-profile of those changes relate to issues of genetic discrimination in life and health insurance, for which existing law is mostly silent and without government policy. The Bill now has new regulation – making powers enabling the Governor General to prohibit or regulate the conduct of insurers on genetic testing.

Other notable changes

• Deleting the presumption that an insurance contract is a consumer insurance contract.
• Amending the clauses setting out the consumer insurance contract disclosure duty, aligning it more with the UK provision on which it is based (including reference to dishonesty rather than fraud). This makes it clearer and easier to apply.
• Leaving the duty of utmost good faith to be developed by the common law (and not codified as was proposed in the original Insurance Contracts Bill, and on which there was heated debate in public hearings and on the Select Committee).
• Changing the implied term on payment of claims, so that “reasonable time” includes a reasonable time to gather information needed to investigate and assess the claim. This addresses some concerns, but still leaves the imposition of an implied term in every insurance contract.
• Trying to address concerns with wording for the third party claim regime (replacing statutory charges) on the effect of an insurer’s payments to a specified policyholder. The Bill intends to avoid collusive arrangements between an insurer and a policyholder that may be to the detriment of a third party claimant, so now better recognises that some compromises or settlements between insurers and specific policyholders may be permissible where they were in good faith and on reasonable terms.
• Enabling a person to require payment of a reasonable charge for providing information to a third party claimant. Previously, while a person could charge, the information had to be provided regardless.

The second reading was suspended, as the Bill was removed from urgency. It is expected to be called again at the next sitting – scheduled for 15 October 2024.

So, while there is a slight delay, the Bill remains on track for passing its second and third reading before year-end.