Consumers could ultimately be forced to pay higher premiums if the Government pushes ahead with its draft bill to extend unfair contract terms (UCT) to insurance contracts.

The Insurance Council of Australia (ICA) made the comments today as consumer advocates delivered a petition to Treasurer Josh Frydenberg in a bid to pressure the Government to introduce the bill in this week’s sitting of Parliament, which is also the final session scheduled for this year.

The industry has previously warned that the proposed reforms would create too much legal uncertainty and could lead to outcomes detrimental to consumers.

“Not enough weight has been given to expert industry insights that show how applying broad-brush UCT protections would detrimentally affect insurance customers,” ICA spokesman Campbell Fuller told insuranceNEWS.com.au.

“In particular, the proposed narrow definition of the main subject matter makes almost every term in an insurance contract legally contestable. This is not what is applied in other sectors.

“If insurers cannot rely on the legitimate terms of their contracts, they will have to price in the additional risk. This will be passed onto consumers, who are already suffering from cost-of-living pressures and unfair taxes on insurance.

“Insurers will have to reassess their risk appetite in many regions of Australia, and this may result in reduced competition, products with fewer beneficial features and a reassessment of pricing.”

According to consumer advocates, the planned UCT reforms must be introduced as quickly as possible.

“We are urging the Government to introduce the bill in the final sitting for this year so that we can finally close up this loophole in our laws,” Consumer Action Law Centre Senior Policy Officer Cat Newton told insuranceNEWS.com.au.

“We can’t wait any longer to have these critical reforms passed…the last thing anybody needs when going through difficult times is to have their claims denied because the insurers are relying on unfair terms.”

The centre and Choice teamed up for the petition, which garnered more than 20,400 signatures.