Home / Daily / Brokers told to prepare for looming UCT reforms
20 May 2020
Insurance brokers have been urged to start preparing for the unfair contract terms (UCT) reforms that will commence next year.
National Insurance Brokers Association (NIBA) CEO Dallas Booth confirmed today in a video to broker members that UCT laws will apply to insurance contracts on April 5 as planned, following the passage of the Financial Sector Reform Bill in Federal Parliament last year.
The Federal Government’s recent decision to defer implementation of a number of Hayne royal commission reforms does not extend to the UCT changes.
“It’s something that brokers are going to have to come to grips with and to learn about,” Mr Booth says in the video. “It’s a fairly technical legal issue and I do recommend you talk to your preferred legal provider to get an assessment as to whether any broker wordings would be particularly liable to challenge.
“It will be particularly important if your firm has its own wordings, particularly for domestic insurance, for retail customers.
“You are going to have to review your policies to see whether any of those clauses, any provisions in the contract would be regarded as unfair.”
He says NIBA will be providing more information in the next few months about the changes and what they will mean for brokers.
The move to ban unfair terms in insurance contracts flows from a recommendation by the Hayne royal commission in its final report to the Government.
According to law firm Clayton Utz, only certain contracts of insurance providing medical indemnity cover won’t have to comply with the UCT regime.
“This is a significant expansion of the UCT laws,” the law firm says in an article posted on its website.
“Car insurance, travel insurance, life insurance and house and contents insurance policies will become subject to the UCT laws, provided they are standard-form contracts that are either consumer contracts or small business contracts.
“The practical effect will be that all contracts of insurance, except for particular contracts providing medical indemnity cover, will be subject to the UCT laws.”