June 2012 - Insurance contracts under a UK spotlight
Since the last issue of AILA News, I have participated in two major events as president.
I was invited by Professor Rob Merkin, Research Professor of Commercial Law at Southampton University, to participate in the Insurance Contract Law Reform Academic Conference hosted by Norton Rose in More Riverside, London, on April 16.
Speakers included UK Law Commissioner David Hertzell; UK Financial Ombudsman Service senior ombudsman Robert Short; and some notable academics.
I participated in a panel discussion before lunch with Professor Merkin; Murdoch University insurance and maritime law specialist Kate Lewins, from Perth; and Mr Hertzell. My contribution concerned discussions on Australia's experience with pre and post contract remedial provisions in the Insurance Contracts Act (sections 28 and 54). It was a wide-ranging discussion that also touched good faith (sections 13 and 14) and fraudulent claims (section 56).
Craig Langstone, New Zealand Insurance Law Association President, participated in a panel discussion in the afternoon and spoke about the New Zealand experience.
Dr Lewins's presentation on insurance law in Australia was excellent and very well received. There is certainly an appetite for reform.
She was followed by several prominent UK insurance law academics.
Insurance Reform Advisory Group
On March 29 I attended, on AILA's behalf, a further meeting convened by Financial Services and Superannuation Minster Bill Shorten, who chairs the Insurance Reform Advisory Group (IRAG).
The meeting was attended by key stakeholders, including senior members of the industry and consumer groups. Before the IRAG meeting, Mr Shorten indicated he was very keen to promote the National Disability Insurance Scheme, which was detailed in the May federal budget.
Discussing senior Australians and travel insurance during the meeting, Mr Shorten said the ageing population meant accessibility of insurance by older Australians, including travel insurance, was important. The group discussed some challenges faced by senior Australians and advised of ongoing work by members to assist senior Australians to access travel cover.
The Insurance Council of Australia (ICA) is establishing a telephone hotline for insurance inquiries and will explore how it could handle travel inquiries for older Australians. The National Insurance Brokers Association will explore upgrading its website to make it more user friendly for consumers, including senior Australians.
The minutes show there were divergent views on the extent of the problem for senior Australians accessing travel insurance. IRAG participants representing senior Australians agreed to survey their members to identify and gauge the extent of any problems. The results will inform policy considerations and industry solutions.
IRAG agreed to a roundtable meeting of interested IRAG participants being convened by Treasury in July to look into senior Australians' concerns, including premium pricing.
The group discussed some challenges faced by older working Australians in accessing income protection. The product was broadly available and many life insurers offered protection to workers up to the age 65 and, in some cases, beyond. The life industry recognised the pension age was scheduled to rise to 67 and it was important sufficient income protection was available for older working Australians who would be affected by that rise. It agreed in principle to work towards addressing any gap in income protection insurance for older working Australians.
Industry Super Funds Network said most industry superannuation funds should be able to increase income protection coverage beyond 65 over time. The Association of Superannuation Funds of Australia said some, though not all superannuation funds, already extended income protection cover to beyond 65. It said while there may be pricing issues for extending cover beyond 65 for some funds, including cross-subsidisation and upward pressure on premiums, those issues were not insurmountable.
IRAG's mental health and insurance working group met three times since the last IRAG meeting. The group's discussions included:
- opportunities to improve training of staff dealing with people with mental health conditions;
- contractual issues, including consistency of clauses across policies and data availability; and
- the scope of policy coverage offered by insurers.
Mr Shorten encouraged working group participants to continue their dialogue and work towards practical initiatives to improve insurance outcomes for people with mental illness, including by training financial advisers and reviewing and, where appropriate, removing unnecessary inconsistency in insurance contract clauses.
ICA told IRAG it was working with the Department of Human Services (DHS) to identify possible demand from Centrelink customers for fortnightly payments of premiums through Centrelink's Centrepay facility.
ICA and DHS had also met to discuss other issues that may present barriers to paying premiums through Centrepay, including:
- the cost of systems upgrades for insurers to receive fortnightly payments; and
- legislative limitations to allow Centrelink to withhold fortnightly premium payments and remit them monthly to insurers.
The parties agreed to continue to work through those issues. It was a very productive discussion with beneficial outcomes for the insurance industry and consumers.