The Insurance Council of Australia (ICA) has told Federal Treasury that changes to the duty of disclosure introduce onerous requirements for insurers.

It says there is a technical issue with amendments to the Insurance Contracts Act, due to take effect on December 28 next year, and proposes changes.

It says the changes to amendments capture contracts that do not fit into named categories covered by the Act, such as motor and home and contents insurance.

Insurers can opt in to the duty of disclosure obligations for contracts outside those classes, and the amendments introduce increased obligations on contacting insureds to ask questions at renewal.

Insurers can amend their procedures, but ICA says this may not be practicable because of cost or systems restrictions. They can waive the duty of disclosure on renewal, but that puts them at significant risk, or they can decide not to offer renewal.

It proposes that insurers should be able to opt out in some circumstances.

Insurers offering new business from 28 December would need to ensure product disclosure statements are amended so they avoid being captured by the amendment.