Commonwealth Numbered Acts Commonwealth Numbered ActsPart 1 -- Insurer avoidance of life insurance contracts
1 Subsection 29(3)
Repeal the subsection, substitute:
(3) If:
(a) the failure was not fraudulent or the misrepresentation was not made fraudulently; and
(b) the insurer would not have been prepared to enter into a contract of life insurance with the insured on any terms, if the duty of disclosure had been complied with or the misrepresentation had not been made;
the insurer may, within 3 years after the contract was entered into, avoid the contract.
2 Application
(1) The amendments made by this Part apply to a contract of life insurance that is originally entered into after the commencement of this item.
(2) If:
(a) a contract of life insurance that was originally entered into before the commencement of this item is varied after that commencement to:
(i) increase a sum insured under the contract in respect of one or more of the life insureds; or
(ii) provide one or more additional kinds of insurance cover; and
(b) the variation was not an automatic variation but was required to be expressly agreed between the insurer and the insured before the contract was varied;
then:
(c) the contract is treated, to the extent of the variation, as if it had been originally entered into after the commencement of this item; and
(d) the amendments made by this Schedule apply to the contract to the extent of the variation.
Part 2 -- Duty to take reasonable care not to make a misrepresentation
3 Subsection 11(1)
Insert:
"consumer insurance contract " has the meaning given by section 11AB.
"duty to take reasonable care not to make a misrepresentation " means the duty referred to in section 20B.
"relevant failure " , in relation to a contract of insurance, has the meaning given by section 27AA.
4 At the end of Part I
Add:
11AB Consumer insurance contracts
(1) For the purposes of this Act, a contract of insurance is a consumer insurance contract if the insurance is obtained wholly or predominantly for the personal, domestic or household purposes of the insured.
(2) A contract of insurance is also a consumer insurance contract if:
(a) it is for new business; and
(b) the insurer, before the contract is entered into, gives the insured a written notice stating that the contract is a consumer insurance contract.
(3) If it is alleged in a proceeding in relation to a contract of insurance that the contract is a consumer insurance contract, it is presumed that the contract is a consumer insurance contract unless the contrary is established.
5 Section 12
Omit all the words after "a duty other", substitute:
than:
(a) in relation to a consumer insurance contract or proposed consumer insurance contract--the duty to take reasonable care not to make a misrepresentation; or
(b) in relation to any other contract of insurance or proposed contract of insurance--the duty of disclosure.
6 Before Division 1 of Part IV
Insert:
20A Application of this Division
This Division applies in relation to:
(a) consumer insurance contracts; and
(b) proposed contracts of insurance that, if entered into, would be consumer insurance contracts.
20B The insured's duty to take reasonable care not to make a misrepresentation
(1) Subject to this Act, an insured has a duty to take reasonable care not to make a misrepresentation to the insurer before the relevant contract of insurance is entered into.
(2) Whether or not an insured has taken reasonable care not to make a misrepresentation is to be determined with regard to all the relevant circumstances.
(3) Without limiting subsection (2), the following matters may be taken into account in determining whether an insured has taken reasonable care not to make a misrepresentation:
(a) the type of consumer insurance contract in question, and its target market;
(b) explanatory material or publicity produced or authorised by the insurer;
(c) how clear, and how specific, any questions asked by the insurer of the insured were;
(d) how clearly the insurer communicated to the insured the importance of answering those questions and the possible consequences of failing to do so;
(e) whether or not an agent was acting for the insured;
(f) whether the contract was a new contract or was being renewed, extended, varied or reinstated.
(4) Any particular characteristics or circumstances of the insured of which the insurer was aware, or ought reasonably to have been aware, are to be taken into account in determining whether an insured has taken reasonable care not to make a misrepresentation.
(5) The insured is not to be taken to have made a misrepresentation merely because the insured:
(a) failed to answer a question; or
(b) gave an obviously incomplete or irrelevant answer to a question.
(6) To avoid doubt, a misrepresentation made fraudulently is made in breach of the duty to take reasonable care not to make a misrepresentation.
20C Warranties of existing facts to be representations
A statement with respect to the existence of a state of affairs that is:
(a) made in or in connection with a contract of insurance; and
(b) made by or attributable to the insured;
does not have effect as a warranty but has effect as though it were a statement made to the insurer by the insured during the negotiations for the contract but before it was entered into.
7 Division 1 of Part IV (heading)
Repeal the heading, substitute:
Division 1 -- Other contracts: insured's duty of disclosure
8 Before section 21
Insert:
20E Application of this Division
This Division applies in relation to:
(a) contracts of insurance that are not consumer insurance contracts; and
(b) proposed contracts of insurance that, if entered into, would not be consumer insurance contracts.
9 Sections 21A and 21B
Repeal the sections.
10 Paragraph 22(1)(b)
Repeal the paragraph.
11 Paragraph 22(1)(c)
Omit "section 31A", substitute "subsection 27AA(2)".
12 Division 2 of Part IV (heading)
Repeal the heading, substitute:
Division 2 -- Other contracts: misrepresentations by insured
13 Before section 23
Insert:
23A Application of this Division
This Division applies in relation to:
(a) contracts of insurance that are not consumer insurance contracts; and
(b) proposed contracts of insurance that, if entered into, would not be consumer insurance contracts.
14 Division 3 of Part IV (heading)
Repeal the heading, substitute:
Division 3 -- Remedies for relevant failures
15 Before section 27A
Insert:
27AA Meaning of relevant failure
(1) In this Act, a relevant failure in relation to a contract of insurance is:
(a) if the contract is, or would be, a consumer insurance contract--a misrepresentation made by the insured in breach of the duty to take reasonable care not to make a misrepresentation; or
(b) otherwise:
(i) a failure by the insured to comply with the duty of disclosure; or
(ii) a misrepresentation made by the insured to the insurer before the contract was entered into.
(2) Without limiting subsection (1), if, in relation to a contract of life insurance under which a person other than the insured would become a life insured:
(a) the life insured made a misrepresentation during the negotiations for the contract but before it was entered into; and
(b) the misrepresentation would have been a breach of the duty to take reasonable care not to make a misrepresentation if that duty had applied to the life insured in relation to the contract;
then the misrepresentation is a relevant failure in relation to the contract (whether or not the contract is a consumer insurance contract).
16 Subsection 28(1)
Repeal the subsection, substitute:
(1) This section applies if a relevant failure occurs in relation to a contract of general insurance, but does not apply if the insurer would have entered into the contract, for the same premium and on the same terms and conditions, even if the failure had not occurred.
17 Subsection 28(2)
Omit "the failure was fraudulent or the misrepresentation was made fraudulently", substitute "the relevant failure was fraudulent".
18 Subsection 28(3)
Omit "the failure had not occurred or the misrepresentation had not been made", substitute "the relevant failure had not occurred".
19 Subsection 29(1)
Repeal the subsection (not including the note), substitute:
Scope
(1) This section applies if a relevant failure occurs in relation to a contract of life insurance, but does not apply if:
(a) the insurer would have entered into the contract even if the failure had not occurred; or
(b) the failure was in respect of the date of birth of one or more of the life insureds.
20 Subsection 29(2)
Omit "the failure was fraudulent or the misrepresentation was made fraudulently", substitute "the relevant failure was fraudulent".
21 Paragraph 29(3)(a)
Omit "failure was not fraudulent or the misrepresentation was not made fraudulently", substitute "relevant failure was not fraudulent".
22 Paragraph 29(3)(b)
Omit "duty of disclosure had been complied with or the misrepresentation had not been made", substitute "relevant failure had not occurred".
23 Subsection 29(4) (definition of Q )
Omit "the duty of disclosure had been complied with or the misrepresentation had not been made", substitute "the relevant failure had not occurred".
24 Subsection 29(6)
Omit "the duty of disclosure had been complied with or the misrepresentation had not been made", substitute "the relevant failure had not occurred".
25 Paragraph 29(7)(b)
Omit "no failure to comply with the duty of disclosure, and no misrepresentation, by the insureds under the similar contracts before they were entered into", substitute "no relevant failure in relation to the similar contracts".
26 Subsection 31(1)
Omit "failure to comply with the duty of disclosure or fraudulent misrepresentation", substitute "relevant failure".
27 Subsection 31(2)
Omit "failure or misrepresentation", substitute "relevant failure".
28 Section 31A
Repeal the section.
29 Section 32 (heading)
Omit " Non-disclosure or misrepresentation ", substitute " Relevant failure ".
30 Subsection 32(1)
Omit "failure to comply with the duty of disclosure, or a misrepresentation was made to the insurer,", substitute "relevant failure".
31 Subsection 32(2)
Omit "failure to comply with the duty of disclosure, or the misrepresentation,", substitute "relevant failure".
32 Subsection 32(2)
Omit "or misrepresentation".
33 Section 32A (heading)
Omit " Non-disclosure or misrepresentation ", substitute " Relevant failure ".
34 Section 32A
Omit "failure to comply with the duty of disclosure, or a misrepresentation was made to the insurer,", substitute "relevant failure".
35 At the end of paragraph 60(1)(a)
Add "or".
36 Paragraphs 60(1)(b) and (c)
Repeal the paragraphs, substitute:
(b) there was a relevant failure; or
37 Application of amendments
(1) The amendments made by this Part apply to contracts of insurance, other than contracts of life insurance, that are entered into on or after 5 October 2021.
(2) Subject to subitem (3), the amendments made by this Part apply to contracts of life insurance that are entered into on or after 5 October 2021 (not including contracts of life insurance entered into before that day and extended, varied or reinstated on or after that day as mentioned in paragraph 11(9)(a) or (c) of the Insurance Contracts Act 1984 ).
(3) If:
(a) subitem (2) does not apply to a contract of life insurance; and
(b) on or after 5 October 2021, the contract is varied to:
(i) increase a sum insured under the contract in respect of one or more of the life insureds; or
(ii) provide one or more additional kinds of insurance cover; and
(c) the variation was not an automatic variation but was required to be expressly agreed between the insurer and the insured before the contract was varied;
then:
(d) the contract is treated, to the extent of the variation, as if it had been entered into on or after 5 October 2021; and
(e) the amendments made by this Part apply to the contract to the extent of the variation.
(4) Despite anything else in this item, the amendments made by this Part apply, on and after the commencement of this item, to a contract of insurance that is entered into on or after that commencement if the insurer gives the insured written notice before the contract is entered into that the contract is a consumer insurance contract.