NEWS / Representation
WE ARE YOUR VOICE! Lots still happening…
COVID-19
The Insurance Council of Australia, in consultation with AFCA and ASIC, commenced proceedings in the Supreme Court of NSW seeking clarification of issues relating to the interpretation of certain pandemic exclusion clauses which refer to the now repealed Quarantine Act. The proceedings have been heard by the Court, and at the time of writing the Court’s decision was pending. The financial services regulator in the United Kingdom had commenced a test case in the UK courts seeking clarification of the pandemic exclusion clauses in a number of London market policies. An initial decision has been handed down by the Court, and it is understood both the regulator and a number of insurers have lodged appeals against that decision. NIBA continues to provide information to members in relation to government support for business, and the continuation of restrictions on community activity for health protection reasons.
FEDERAL
Royal Commission Reforms
At the time of writing (mid November 2020) the series of Bills implementing the Royal Commission recommendations affecting general insurance have not been introduced into the Federal Parliament. NIBA is waiting to see the outcome of submissions lodged with the government earlier this year, and our discussions with treasury and others since that time.
Senate Bushfire Inquiry
The Senate Committee inquiring into the summer bushfires has released its report. The important role of insurance was noted by the committee, which indicated the performance of the insurance industry had been “exemplary”. The committee urged state and territory governments to review insurance
taxes and levies in order to keep insurance affordable for as many people as possible.
Federal Bushfire Royal Commission
The Bushfire Royal Commission has also issued its report to government and has emphasised the need for much more preparation for natural disasters, and much greater efforts on the mitigation of risks and making communities more resilient. NIBA has been supporting this position for many years.
Small Business Ombudsman Insurance Inquiry
As recently advised, the Australian Small Business and Family Enterprise Ombudsman has commenced an inquiry into the availability and affordability of general insurance cover for SME businesses. Included in the inquiry is the role of brokers in getting the right coverage. NIBA provided a detailed submission to the Inquiry and has met with the Small Business Ombudsman and her officials to discuss the role of insurance brokers, and current market conditions in relation to the supply and cost of general insurance cover. It was pleasing to hear the Ombudsman has a good understanding of the role of insurance brokers (as a previous small business owner herself ). NIBA continues to liaise with the Ombudsman’s office in relation to this inquiry. A report is due before the end of 2020. More information about the Insurance Inquiry is available at: www.asbfeo.gov.au/ current-inquiries/insurance-inquiry
Unfair Contracts Terms Legislation
As previously advised, legislation which will apply existing unfair contracts terms legislation to insurance contracts has been approved by the Federal Parliament. These
10 / INSURANCE ADVISER DECEMBER 2020 / JANUARY 2021
reforms were recommended by the Royal Commission and by the ACCC Interim Report on Insurance Issues in Northern Australia. It is important to note that implementation of this legislation has NOT been deferred by the Federal Government. The reforms will take effect in early April 2021. By that time all retail policies will need to be reviewed to identify and remove any potential unfair terms. As noted above in relation to Design and Distribution obligations, where brokers have policies with their own wordings and cover, they will need to review the terms of cover and the wording of the policies to determine whether the policies might be caught by the Unfair Contract Terms legislation. This should be done in collaboration with the relevant underwriter. We also note that these are technical legal questions, and we strongly urge brokers to get legal support for this purpose.
Add-on Insurance Reforms
The Government has undertaken consultation on Royal Commission proposals to ban virtually all forms of general insurance sold at the same time as a non-insurance product (for example, travel insurance sold when a customer purchases an air ticket or an overseas holiday, or insurance taken out when a rental car is hired). NIBA has provided a detailed submission to treasury indicating the proposed approach is far too wide. We have spoken with treasury on this recently and have been given an assurance that the main concerns have been taken into account in the drafting of the legislation. NIBA will review the matter further when the Bill is tabled in Parliament.
Anti-hawking Reforms
One of the Royal Commission recommendations was to prohibit the hawking of financial
