Australian insurance law


Australian insurance law is based on commercial contract law, but is subject to regulations that affect the insurance industry and insurance contracts within Australia. Commonwealth Parliament has power to make laws with respect to insurance and insurance companies under section 51 and (xx) of the Australian Constitution. Generally, the Insurance Act 1973 and Insurance Contracts Act 1984 are the main acts that apply, however there are a number of other pieces of legislation enacted by the states, private codes and voluminous case law all of which forms the body of insurance law.

Legislation

The Insurance Act 1973 sets minimum capital and solvency requirements for companies wanting to enter or operate in the insurance market.
Chapter 7 of the Corporations Act 2001 regulates the way in which insurers and insurance agents and brokers carry on business and how they deal with the people they do business with and intend to do business with.
The Insurance Contracts Act 1984 applies to most insurance contracts with an Australian connection and is intended to ensure that a fair balance is struck between the interests of the insurer and the insured.
The primary federal laws affecting the industry include:Life Insurance Act 1995 Insurance Act 1973 Health Insurance Act 2007 Corporations Act 2001 Insurance Contracts Act 1984
Other legislation which affects the industry includes:
Further regulations include:

Regulators

The prudential aspects of general, life and health insurance are regulated by the Australian Prudential Regulation Authority, which has the power under the Insurance Act 1973 to investigate a general insurer, freeze its assets or direct it to take specific action.
The Australian Securities & Investments Commission is responsible for the general administration of the Insurance Contracts Act 1984. Matters relating to advice or disclosure of insurance products sold are regulated by ASIC. The Australian Competition & Consumer Commission also has a regulatory role with respect to competition law.
In certain states, various bodies also have powers in regulating certain types of statutory insurance. For example, in New South Wales the Motor Accidents Authority regulates Compulsory Third Party motor liability insurance. In many cases these bodies have powers regarding premium rating and reinsurance rules.

Insurance contract

The formation of an insurance contract is governed by ordinary contractual principles however, as a commercial contract, a policy of insurance should be given a businesslike interpretation "having regard to the language used by the parties, the commercial circumstances the document addresses, and the objects which it is intended to secure."

Code of Practice

The General Insurance Code of Practice is a self-regulatory code that binds all general insurers who are signatories to it. It has been approved by ASIC pursuant to s 1101A of the Corporations Act 2001.

Australian Financial Complaints Authority

If a person doesn't agree with the outcome of the insurer's Internal Dispute Resolution process, they can contact the Australian Financial Complaints Authority with a request that the Service resolve the dispute.