Brokers want insurance contracts left out of new federal consumer protection legislation, saying the Insurance Contracts Act obviates the need for additional generic consumer laws.

The National Insurance Brokers Association (NIBA) says in a submission to a Senate committee that the Trade Practices Amendment (Australian Consumer Law) Bill would result in contradictory terms, requirements, penalties and obligations.

The Bill, which is currently before a Senate hearing, implements a national "unfair contract terms" regime.

It gives new enforcement powers to the Australian Competition and Consumer Commission and the Australian Securities and Investments Commission.

Consumer Affairs Minister Craig Emerson says the insurance industry is already comprehensively regulated through the Insurance Contracts Act, but consumer lawyers don't agree.

Consumer Action Law Centre Director Policy and Campaigns Nicole Rich says there are many reasons the assumption of utmost good faith in insurance contracts does not adequately protect consumers.

"We all agree standard form contracts are efficient," Ms Rich told insuranceNEWS.com.au.

"We're not suggesting an insurance company negotiate every term, but because of the practice of standard form contracting in a mass modern marketplace, consumers have no power to change the terms of any contract."

She says an example is travel insurance contracts with broad exclusions on unattended luggage in a public place, which have been proven to disadvantage consumers.

NIBA CEO Noel Pettersen says generic consumer protection provisions are usually difficult to apply to insurance.

"For this reason it is generally accepted practice throughout the world to have specific consumer provisions apply to insurance."