A coalition of consumer advocates wants the Government to take further its unfair contract terms (UCT) reform agenda for the insurance industry.

They have proposed a five-point list that includes prohibiting unfair contract terms and appointing a NSW-style Insurance Monitor to ensure insurers do not use the reforms as an excuse to raise premiums.

Additionally, they say the exposure draft should be amended to clarify that a court may make orders other than voiding the unfair term and changing third-party beneficiary provisions so there are no exemptions or loopholes for group insurance.

The Consumer Action Law Centre, the Financial Rights Legal Centre and Westjustice made the suggestions in a joint submission to the consultation for Treasury’s draft UCT legislation, which closed last month.

“While we are very supportive of the Government bringing insurers in the UCT regime, it is clear that the UCT regime as a whole must be bolstered by making unfair terms illegal and applying civil penalties,” the submission says.

“Now is the time to fix this problem economy-wide for all types of consumer contracts, including insurance.”

The groups support the Government’s preferred option to have the main subject matter narrowly defined, as opposed to a broad definition that is favoured by the Insurance Council of Australia (ICA).

“In our view, it is the only acceptable option,” the submission says.

“Disappointingly, some elements of the insurance industry have continued to argue for the main subject matter to be defined as broadly as possible in order to exempt the majority of contract terms from review under UCT laws, which would render the regime largely ineffective.”