The Federal Government has reintroduced a draft bill amending the Insurance Contracts Act, after its previous attempt expired because of the 2010 election.

The bill now contains a standard flood definition for buildings and contents, to be applied to all insurance contracts, and a requirement for consumers to be given key fact sheets disclosing terms and risks of contracts. 

Last year the Government issued a consultation paper outlining the flood definition and the key facts statement. The final version of these are now in the new draft bill.

Other significant measures include allowing the use of electronic communication for statutory notices and documents, and giving the Australian Securities and Investments Commission power to address breaches of the duty of utmost good faith – including claims-handling and making the duty of disclosure easier for consumers to understand, especially with household policy renewals.

Minor amendments include the timing of the application of duty of disclosure measures and factors a court should consider regarding the duty.

The draft legislation will reduce complexity and provide certainty for insurers and consumers, according to Financial Services Minister Bill Shorten.

“These measures build on the Government’s significant reforms to insurance, such as a standard definition of flood and a one-page key facts sheet for all home and contents policies, to help Australian consumers understand what they are covered for,” he said.

“The measures in this bill will facilitate even more effective communication between insurers and consumers.”

Feedback on the draft bill will be accepted until December 12.