A review of consumer law has recommended applying unfair contract terms to insurance contracts – a move the insurance industry has consistently argued against.

Consumer Affairs Australia and New Zealand (CAANZ) has submitted its final report for the review, commissioned in March last year.

It says “a range of stakeholders” expressed concern that consumers who are party to standard-form insurance contracts are not covered by the unfair contract terms protections.

“While the Insurance Contracts Act contains its own protections for consumers (such as the duty to act in the ‘utmost good faith’ and specific disclosure requirements), they are not the same as the [Australian Consumer Law] protections and have not been shown to provide equal or greater consumer protection,” the report says.

“CAANZ proposes that the unfair contract terms protections be applied to insurance contracts to strengthen, clarify and harmonise the rights and remedies available to consumers and increase options for redress.”

The Insurance Council of Australia told insuranceNEWS.com.au it believes such a change would bring no benefits to consumers, while increasing compliance costs.

“Equal or greater protections are already available to consumers through the Insurance Contracts Act,” spokesman Campbell Fuller said.

“The general insurance sector is tightly regulated by the Australian Securities and Investments Commission and the Australian Prudential Regulatory Authority, while relevant ICA members are also bound by the General Insurance Code of Practice, which commits insurers to mandatory standards of service above and beyond their statutory obligations.

“Further, policyholders may lodge disputes with the free and independent Financial Ombudsman Service, which is able to make decisions that are binding on insurers.”

Ministers will consider the CAANZ recommendations later this year.