Paul Angus | December 2013 | Insurance & Financial Services
The changes to Section 67 under the amendments to the Insurance Contract Act 1984 commence in just over two weeks time and apply to all general insurance contracts entered into or renewed after 28 December 2013. Insurers need to be alert to the change in their rights regarding subrogated recoveries and be proactive in initiating recoveries to ensure their recovery rights are preserved.
Changes effecting recoveries of subrogated claims brought about by the amendments to Section 67 of the Insurance Contracts Act 1984 will apply to all contracts of general insurance entered into or renewed after 28 December 2013. The new section deals with recovery processes in different way depending on whether: 1. The insurer starts recovery proceedings; 2. The insured starts recovery proceedings; or
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3. Recovery proceedings are started jointly. The order in which proceeds of a recovery action are allocated can now be altered by reference to the party who initiates recover proceedings. Insurers need to be aware that whilst an insurer and insured still owe each other a duty of utmost good faith to include each other’s losses in any recovery action and to consider those rights when taking action to recover monies, the party that initiates a recovery action when there is both an insured and uninsured component of loss will potentially entitle themselves to first claim on the spoils of any recovery achieved under the effect of the new section 67. Insurers can specifically deal with the allocation of the proceeds of a recovery by agreement with the insured or in their policy wordings, as the new section 67 enables the policy to override the rights set out in section 67. However, in the absence of an agreement, or the policy wording dealing with the allocation of recovered monies, section 67 will influence the way in which those funds may be allocated. While an insurer must still ensure that any uninsured loss of the insured is included in recovery proceedings, insurers who initiate recovery proceedings will improve their ability to first access to any funds recovered.
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The new section effects recoveries arising from any policy of general insurance entered into or renewed after 28 December 2013. General insurers should be prepared and have in place a process to deal with recoveries promptly in light of the new frame work. If you wish to discuss the practical effects on subrogated recoveries brought about by the changes to section 67 and how TurksLegal might be able to assist you, please contact us. We would be happy to discuss practical solutions for you and your business.
For more information, please contact:
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Are you ready for the changes to recoveries from the ICA Amendments? Paul Angus | December 2013
Paul Angus Partner T: 02 8257 5780 M: 0408 188 808 paul.angus@turkslegal.com.au
Peter Moriarty Partner T: 03 8600 5012 M: 0410 459 857 peter.moriarty@turkslegal.com.au
Michael Adie Senior Associate T: 02 8257 5768 M: 0419 695 887 michael.adie@turkslegal.com.au
Ben Karalus Senior Associate T: 03 8600 5013 M: 0417 209 771 benjamin.karalus@turkslegal.com.au
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