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Media release: Consumers win as unfair insurance contract loophole to be closed

The Financial Rights Legal Centre (Financial Rights) has welcomed the Government’s release of exposure draft legislation that extends the unfair contract term (UCT) regime to insurance contracts. (1)

“Unfair contract term laws have for some time applied to most if not all contracts that Australian’s sign – except, that is, to insurance,” said Alexandra Kelly, Financial Rights’ Director of Casework.

“It is high time to close this loophole and ensure that the insurance industry meet community expectations and remove unfair terms from their contracts.”

The exposure legislation comes after the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry recommended extending the application of the unfair contract terms regime to insurance contracts. The Government supported this recommendation in full.

“We are pleased to see the Government act so swiftly to implement Commissioner Hayne’s recommendation and protect financial consumers from further exploitation.”

“To this day we continue to see terrible terms in insurance contracts – from reliance on out of date medical definitions or requiring a cancellation to be in writing and agreed by the insurer to consumers having to pay for the costs of their insurer’s investigation – we’ve seen them all.
“We look forward to this Bill being passed and insurers cleaning up their contracts.”

(1)- Media Release Taking action on the Banking, Superannuation & Financial Services Industry Royal Commission Recommendation 4.7: Extending unfair contracts terms to insurance contracts, 30 July 2019, http://jaf.ministers.treasury.gov.au/media-release/083-2019/