Marine contracts should be included in Canberra’s plans to extend unfair contract terms protection legislation to the sector, the Insurance Council of Australia (ICA) says.

The call features in a submission to a Treasury discussion paper reviewing unfair contract terms protections for small businesses that took effect in November 2016.

The changes applied to marine contracts, which meant these were treated differently from other insurance contracts.

“However, given that the Government has committed to extending unfair contract terms protections to general insurance contracts, we suggest marine insurance should be subject to the same unfair contract terms model that applies to general insurance contracts,” ICA says.

“This would allow small business parties to marine insurance contracts to continue to challenge contractual terms for unfairness… while avoiding duplication.

“Furthermore, this approach would avoid regulatory inconsistency across insurance classes and its associated consequence.

“The legal complications and uncertainty around these contracts would be alleviated if the mixed risks are subject to the same unfair contract terms regime.”

ICA also suggests Treasury reconsider its small business definition, because the monetary value of a general insurance contract provides little indication of the demarcation between a small and large company.

“The experience of our members is that the definition of small business as a business of fewer than 20 employees is difficult to verify, and contributes substantially to compliance costs given the large number of small business suppliers they contract with.

“[ICA] had previously suggested that an appropriately set transaction threshold should be coupled with an exclusion of publicly listed companies to eliminate businesses that are obviously not small businesses.

“We suggest that reconsideration is given to this aspect of the small business definition.”