Assistant Treasurer Bill Shorten has put insurers “on notice” that community and parliamentary forces are pushing for universal legal protections for all consumers.

Insurers were the only industry spared from new laws enacted in January, which provide consumers with protection from unfair contracts. They successfully argued that similar protections were already afforded consumers under the Insurance Contracts Act 1984.

But consumer groups have argued the Insurance Contracts Act is weighted to protect insurers’ interests ahead of consumers.

Mr Shorten’s comments last week raise the prospect of amendments to the Insurance Contracts Act to align it with the recently amended Trade Practices Act covering consumer rights – something insurers have lobbied hard to avoid.

After meeting with the Insurance Council of Australia (ICA) board in Sydney on Thursday to discuss universal flood definitions and clearer language in policy statements, Mr Shorten said greater protection for policyholders was also discussed.

“We raised other issues which are also issues which have bedevilled relationships between consumer groups and insurance companies,” he said.

“One of these is whether or not the insurance industry should be covered by the Australian consumer law, or have separate legal treatment under separate laws.

“We’ve put the insurance industry on notice that it’s not just consumer groups but a parliamentary inquiry has said there should be one law for all services to consumers.

“They’re going to take that away and think about that.”

Mr Shorten says in his next two meetings with insurers scheduled for later this month the “issue of consumers accessing legal protection” will be discussed, including the “best mechanism for that”.

Shannon Walker, a spokesman for Mr Shorten, says the Government is already examining legislative options to strengthen consumer rights.

“Certainly the insurance industry knows that Parliamentary Secretary David Bradbury has looked at the Insurance Contacts Act and how to bring that more in line with wider consumer protection,” he said.

“ICA basically says [the Insurance Contracts] Act takes precedence over all other acts. It’s one of the things on the table.

“The Government and the insurers disagree on it, but will work through it.”

See ANALYSIS