Insurers have been working closely with the Australian Securities and Investments Commission (ASIC) to prepare for next week’s application of unfair contract terms to insurance contracts, the Insurance Council of Australia (ICA) says.

Unfair contract terms protections will apply to consumer and small business insurance contracts entered into or renewed from April 5, and to terms in existing contracts that are varied from April 5.

ICA says insurers have been preparing for the legislation “since its passage and have taken the opportunity to not only identify potentially unfair terms but also to improve the clarity and overall usefulness of policy documentation”.

“In addition, insurers worked closely with ASIC as part of its targeted review of insurance contracts for fairness,” an ICA spokesman told insuranceNEWS.com.au.

“Our members have worked proactively to identify any potential unfair contract terms and either remove, reword or qualify them.

“Members welcome the work done by ASIC to date including its updated guidance on unfair contract term protections and will continue to work collaboratively with ASIC to make sure that insurance contracts continue to meet community expectations.”

ASIC last week revealed it had undertaken “targeted supervisory work” by reviewing a range of insurance contracts.

“From 5 April 2021 ASIC expects all insurers to ensure that consumer and small business standard form contracts have been reviewed for fairness and that they obtain their own legal advice in relation to potential unfair contract terms where needed,” the regulator said.

“ASIC will continue to monitor insurance contracts for unfair terms and we will consider the range of our regulatory powers where we are concerned about non-compliance and consumer harm.”