August 2007 - Feedback sought on member services
At the AILA Queensland Insurance Law Intensive at Noosa, I appealed to members to tell me what they think of AILA - good or bad.
I’d like to get feedback on the member services we provide, including events, the website and AILA-NZILA News. If you have comments or suggestions, please email me at email@example.com.
I also took the opportunity to thank the many volunteers in the branches who contribute to AILA being such a marvellous association. AILA is the largest chapter in AIDA, the international insurance law association, with more than 1,500 members.
However, there are many more people participating in the field who are not members. I encourage all members to try and introduce new members, particularly younger ones. AILA offers great friendships and collegiality with fellow members.
Since the last issue of AILA-NZILA News, it has been a busy time in the insurance industry. The massive storms that hit northern NSW have seen an influx of claims that the Insurance Council is now estimating will cost the industry about $350 million. My sympathies are with those who lost family and friends and whose properties were damaged.
The NSW storms were followed closely by floods in Victoria. Both events have highlighted the major problem of under or noninsurance. It is vital that all homeowners appreciate the need for insurance cover so they are not left destitute when tragedies like this occur.
These events are shaping up to be more costly to the insurance industry than Cyclone Larry, which hit far north Queensland in March 2006. That event, too, saw many homeowners suffer through a lack of insurance cover.
The Federal Government has released its proposed Bill to regulate direct offshore foreign insurers (DOFIs).
Assistant treasurer Peter Dutton has said the reforms are designed to address the risk to Australian businesses and consumers from unauthorised DOFIs that are unscrupulous or fail. He has said “tailored prudential standards” will be implemented so categories of DOFIs that pose a lower risk would face a reduced regulatory burden. The government is now going through a consultation period to determine how to frame the regulations that would dovetail with the Bill and spell out what exemptions would be available.
Access to foreign insurers that are well capitalised and well regulated is an important element of the Australian insurance market, so it is vital that the final result does not reduce competition and capacity in the market by reducing access to legitimate DOFIs.
The WA District Court is set to test the validity of indemnities sought by insurers against claims on builders' warranty policies. On June 19, WA District Court Judge Philip Eaton ruled that an argument that indemnities were an illegal form of reinsurance should be tested at trial. Judge Eaton was hearing an appeal by a Perth couple against an earlier judgement upholding an indemnity claim made against them by Vero Insurance Ltd, after their building company collapsed. Judge Eaton said the central issue was whether the indemnities were reinsurance. The couple had argued they were and that Vero was breaching the Insurance Act by entering into reinsurance contracts without APRA approval. While disputing the argument, Vero said even if the indemnities were reinsurance, lack of APRA approval in itself did not make them unenforceable. Judge Eaton said there was "a triable issue as to the illegality and enforceability of the general deeds of indemnity" required by builders’ warranty insurers. It will be an interesting argument and I look forward to reading the outcome. (WADC, Vero Insurance Ltd v Harden-Jones & Anor, 98/2007)