Insurers can relax – they’ve been spared from inclusion in a new federal consumer protection law. But future amendments to the Insurance Contracts Act will keep industry lobbyists on their toes.

The Senate Economics Committee has recommended the Government revisit the Act so it runs in parallel with consumer protection provisions of the new Trade Practices Amendment (Australian Consumer Law) Bill.

Insurers were concerned about confusing and expensive overlap that might have resulted if insurance is included in the trade practices amendment bill.

The committee says it is not convinced insurance contracts are beyond the scope of both industry-specific legislation and the general consumer protection laws.

But it says the duty of utmost good faith contained in the Insurance Contracts Act provides a platform to protect consumers from unfair contract terms. It wants a provision inserted to mirror closely the new bill’s provisions on contracts in general.

Insurance lawyers say the industry will now have its work cut out arguing against changes to the Insurance Contracts Act so resulting compliance headaches are kept to a minimum.

Consumer groups that argued for the inclusion of insurance in the consumer law bill have welcomed the Senate committee’s recommendations.

“I think it’s a really good outcome for consumers in that they finally get this official recognition that it is a problem and that it should be fixed,” Consumer Action Law Centre Director of Policy and Campaigns Nicole Rich told insuranceNEWS.com.au.

The Insurance Council of Australia (ICA) says it’s pleased the committee has recognised the new consumer law provisions cannot simply be applied over the top of the Insurance Contracts Act.

“We look forward in the context of foreshadowed legislation to update the Insurance Contracts Act to seeing how the two pieces of legislation can work together,” spokesman Paul Giles told insuranceNEWS.com.au.

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