Proposed laws to strengthen privacy protection could lead to higher claims costs and premiums, the Insurance Council of Australia (ICA) warns.

In a submission to the Australian Law Reform Commission (ALRC), ICA says strengthened laws would provide yet another avenue for suing policyholders, mainly related to public liability cover, and proposals should take into account consequences such as the effect on claims.

“If a new tort does result in an increase in claims costs, insurers would need to reflect the greater risk by specifically excluding the tort from coverage or re-evaluating the premium,” ICA says.

An ALRC discussion paper – Serious Invasions of Privacy in the Digital Era – describes current laws as a patchwork, with inconsistencies and important pieces missing.

Proposed new laws would complement the Federal Privacy Act and state equivalents, which deal with the security of personal information, rather than privacy more generally.

ICA says a high threshold on intentional or reckless invasions of privacy would discourage frivolous or vexatious claims and it seeks consistency between the privacy laws on what is considered “serious”.

A proposal allowing legal action without proof of “actual damage” – so people can be compensated for emotional distress – could lead to many meritless claims, it warns.

ICA says it’s concerned that people who go through alternative dispute resolution could still take court action, increasing costs. It also opposes plans to allow exemplary, or punitive, damages.

“Remedies for a privacy action should be directed at compensating a plaintiff,” ICA says.

ALRC proposals would allow individuals to request destruction of personal information, or that it be made anonymous, but ICA says there should be exceptions for insurance purposes.

Submissions closed last week and the ALRC is due to provide a final report to the Attorney-General in June.