New contract legislation must be passed as soon as possible to bring in key reforms, according to the Insurance Council of Australia (ICA).

The Insurance Contracts Amendments Bill 2013 has the council’s “strong support”, CEO Rob Whelan says in a submission to the Senate’s economics legislation committee.

Insurers and consumers will benefit from a number of the reforms, including an amendment of the Insurance Contracts Act 1984 to state that a breach of the duty of utmost good faith is a breach of the Act, ICA says.

The bill also gives certainty that electronic communication can be used to satisfy notice requirements, reducing cost and ensuring “the delivery of insurance products can be achieved in a simple way that meets the expectations of the community in the 21st century”.

The duty of disclosure for consumers will be clarified, which may benefit insurers, customers and regulators by leading to fewer, less complex disputes, Mr Whelan says. This may reduce insurers’ costs and be reflected in premium rates.

The bill clarifies how subrogation operates and also explicitly states that third-party beneficiaries have rights and obligations.

ICA “notes there was considerable disappointment at the loss of the 2010 bill due to the proroguing of Parliament”, Mr Whelan says.

“In view again of the limited window of parliamentary sitting days for the passage of the 2013 bill, the Insurance Council urges the Senate to pass this bill as soon as possible to deliver a number of widely welcomed changes to insurance law.”