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Published in:
Transparency in the Insurance Contract Law of Austria Read chapter Read first chapter

2019 | OriginalPaper | Chapter

Transparency in the Insurance Contract Law of Australia

Author : Robin Bowley

Published in: Transparency in Insurance Contract Law

Publisher: Springer International Publishing

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Abstract

This chapter examines the extent to which transparency is achieved in the Australian insurance contract law. It focuses on the contractual relationship insurance between insurers and insured clients as set out in the Insurance Contracts Act 1984 (Cth) (the ICA). The analysis in both parts is structured under the four “quadrants” of the duty of utmost good faith—the first quadrant being the insured’s pre-contractual obligations; the second being the insurer’s pre-contractual obligations; the third being the insured’s post-contractual obligations after the inception of the policy and the fourth being the insurer’s post-contractual obligations.

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previous chapter Comparative Analysis of Transparency in Insurance Law in the Civil/Continental Law Jurisdictions
next chapter Transparency in the Insurance Contract Law of England
Footnotes
1
These ‘four quadrants’ of utmost good faith were first conceptualised by Mann (2016b), p. 176.
 
2
Gwynn and Laugesen (2017) and Macquarie Dictionary (2017).
 
3
This chapter is necessarily selective in the cases it discusses. For a more comprehensive examination of the principles of Australian insurance law, the leading texts include Enright and Merkin (2015), Pynt (2017) and Mann (2016a).
 
4
The Marine Insurance Act 1909 (Cth) (MIA) governs contracts of marine insurance in Australia. Because of the small size of the Australian marine insurance market, there have been far fewer cases on the MIA in comparison to those on the ICA. For an overview of the law of marine insurance in Australia, see Enright and Merkin (2015), pp. 705–842.
 
5
The Private Health Insurance Act 2007 (Cth) governs private health insurance.
 
6
Explanatory Memorandum, Insurance Contracts Bill 1984 (Cth), 1.
 
7
See for example Hawke (1994), p. 91; Godfrey (2002), p. 1; Nattrass (2012), p. 299; McGivern (2013), p. 159.
 
8
Enright and Merkin (2015), pp. 471–476.
 
9
Australian Securities and Investments Commission Act2001 (Cth) Sec. 12BF(1).
 
10
The Insurance Contracts Amendment (Unfair Terms) Bill 2013 (Cth) proposed to incorporate a mirror provision to Sec. 12BG of the ASIC Act into a new Sec. 15B of the ICA; however, this proposal was not adopted. For commentary see Mann and Drummond (2017), p. 10.
 
11
See for example Merkin (2012), p. 272; Nattrass (2012), p. 299.
 
12
For an overview of the reforms introduced through the ICAA 2013, see Box and Webster (2013), p. 114; Tarr (2015b), p. 68.
 
13
Insurance Contracts Amendment Bill 2013 (Cth), [2.52]; See also Tarr (2015a), p. 110.
 
14
CE Heath Underwriting and Insurance (Aust) Pty Ltd v. Edwards Dunlop & Co Ltd (1993) 176 CLR 535; (1993) 7 ANZ Ins Cas 61-165; [1993] HCA 21.
 
15
For the definition of a ‘contract of life insurance’, see Sec. 9 of the Life Insurance Act 1995 (Cth).
 
16
CIC Insurance Ltd v. Barwon Region Water Authority (1998) ANZ Ins Cas 61-425; [1998] VSCA 77 at [40]. For commentary see Mann (2016a), p. 83.
 
17
Section 56 of the ICA deals with fraudulent claims and is discussed in Sect. 4.1 below.
 
18
Permanent Trustee Australia Ltd v. FAI General Insurance (2003) 214 CLR 514; 12 ANZ Ins Cas 61-565 [2003] HCA 25.
 
19
Permanent Trustee Australia Ltd v. FAI General Insurance (2003) 214 CLR 514; 12 ANZ Ins Cas 61-565; [2003] HCA 25 at [35].
 
20
Advance (NSW) Insurance v. Matthews (1989) 166 CLR 606; 5 ANZ Ins Cas 60-910; [1989] HCA 22.
 
21
GIO General Ltd v. Wallace (2001) 11 ANZ Ins Cas 61-506; [2001] NSWCA 299.
 
22
Lindsay v. CIC Insurance (1989) 16 NSWLR 673; 5 ANZ Ins Cas 60-913.
 
23
Prepaid Insurance v. Atradius (No 2) [2014] NSWSC 21.
 
24
Prepaid Services Pty Ltd & Ors v. Atradius Trade Credit Insurance NV (2012) 17 ANZ Ins Cas 61-937; [2012] NSWSC 608.
 
25
Prepaid Services Pty Ltd & Ors v. Atradius Trade Credit Insurance NV (2013) 17 ANZ Ins Cas 61-981; [2013] NSWCA 252.
 
26
Prepaid Insurance v. Atradius (No 2) [2014] NSWSC 21 at [133].
 
27
Schaffer v. Royal & Sun Alliance Life Assurance Aust Ltd (2003) 12 ANZ Ins Cas 90-116; [2003] QCA 182.
 
28
Davis v. Westpac Life Insurance (2008) 15 ANZ Ins Cas 80-132; [2007] NSWCA 175.
 
29
NRG Victory Australia v. Hudson (2003) 13 ANZ Ins Cas 90-121; [2003] WASCA 291.
 
30
Hitchens v. Zurich Australia Ltd (2015) 18 ANZ Ins Cas 62-076 [2015] NSWSC 825.
 
31
Hitchens v. Zurich Australia Ltd (2015) 18 ANZ Ins Cas 62-076; [2015] NSWSC 825 at [178].
 
32
Traves (2012), p. 4.
 
33
Michail v. Australian Alliance Insurance Co Ltd [2013] QDC 284.
 
34
Michail v. Australian Alliance Insurance Co Ltd [2014] QCA 138. For commentary, see Tarr (2015a), pp. 109, 114.
 
35
Von Braun v. Australian Associated Motor Insurers (1998) 10 ANZ Ins Cas 61-419; [1998] ACTSC 122.
 
36
Burns v. MMI-CMI Insurance Ltd (1994) 8 ANZ Ins Cas 61-287.
 
37
Traves (2012), p. 1.
 
38
However, Sec. 71 of the ICA provides that provisions of the ICA that require notices, statements, documents or other information to be provided before the contract is entered into will not apply in cases where the insurance is arranged by a broker.
 
39
Suncorp General Insurance Ltd v. Cheihk (1999) 10 ANZ Ins Cas 61-442; [1999] NSWCA 238.
 
40
Suncorp General Insurance Ltd v. Cheihk (1999) 10 ANZ Ins Cas 61-442; [1999] NSWCA 238 at [13].
 
41
Messagemate v (Aust) Pty Ltd v. National Credit Insurance (Brokers) Pty Ltd (2002) 85 SASR 303; (2003) 12 ANZ Ins Cas 61-546; [2002] SASC 327. Williams J held that whilst the specialist broker had arranged this policy, the broker could not be held liable for what His Honour characterised as FAI’s “absurd” construction of the term ‘delivered’ within the policy.
 
42
Suncorp Metway Insurance Limited v. Mason Place Pty Ltd [2011] QDC 209 at [11].
 
43
Lockwood & Lockwood v. Insurance Australia Ltd (2010) 16 ANZ Ins Cas 61-843; [2010] SASC 140.
 
44
Traves (2012), pp. 7–8.
 
45
Hams v. CGU Insurance Ltd (2002) 12 ANZ Ins Cas 61-525 [2002] NSWSC 273.
 
46
Hams v. CGU Insurance Ltd (2002) 12 ANZ Ins Cas 61-525; [2002] NSWSC 273 at [244].
 
47
Marsh v. CGU Insurance Ltd t/as Commercial Union Insurance (2004) 13 ANZ Ins Cas 61-594; [2004] NTCA 1.
 
48
Marsh v. CGU Insurance Ltd t/as Commercial Union Insurance (2004) 13 ANZ Ins Cas 61-594; [2004] NTCA 1 at [11].
 
49
Commonwealth of Australia, Inquiry into flood insurance and related matters: Final Report, September 2011, Natural Disaster Insurance Review, 98.
 
50
Commonwealth of Australia, Inquiry into flood insurance and related matters: Final Report, September 2011, Natural Disaster Insurance Review, 109.
 
51
See also Tarr (2001), p. 199; Traves (2012), p. 1.
 
52
Hams v. CGU Insurance Ltd (2002) 12 ANZ Ins Cas 61-525; [2002] NSWSC 273.
 
53
Commonwealth of Australia, Inquiry into flood insurance and related matters: Final Report, September 2011, 99.
 
54
Commonwealth of Australia Reforming flood insurance: A proposal to improve availability and transparency (November 2011), see https://​archive.​treasury.​gov.​au/​documents/​2221/​PDF/​transparency_​november2011.​pdf.
 
55
Insurance Contracts Act 1984 (Cth) Sec. 37B. The prescribed definition is set out in Reg 34 of the Insurance Contracts Regulations 2017 (Cth). See also Bell (2012), p. 312.
 
56
Insurance Contracts Regulations 2017 (Cth) Reg 12.
 
57
Insurance Contracts Act 1984 (Cth) ss 33A – 33D.
 
58
Insurance Contracts Regulations 2017 (Cth) Regs 12 – 13; Schedule 5.
 
59
In Entwells Pty Ltd v. National & General Insurance Co Ltd (1991) 6 ANZ Ins Cas 61-059 at 77,136, Ipp J held that ‘… s 54(1) does not limit or restrict the effect of s 13. It merely provides the extent of the remedy for the duty imposed by s 13’. For commentary, see Mann (2016a), pp. 63–64.
 
60
Australian Law Reform Commission, Insurance Contracts, Report No 20 (1982) [218] – [220].
 
61
Australian Law Reform Commission, Insurance Contracts, Report No 20 (1982), [228] – [229]. For commentary, see Mann (2016a), pp. 409–410.
 
62
Austcan Investments Pty Ltd v. Sun Alliance Insurance Ltd, (1992) 7 ANZ Ins Cas 61-116.
 
63
Ferrcom Pty Ltd v. Commercial Union Assurance Co of Australia Ltd (1993) 176 CLR 332; 7 ANZ Ins Cas 61-156; [1993] HCA 5.
 
64
Gibbs Holdings Pty Ltd v. Mercantile Mutual Insurance (Aust) Ltd (2002) 11 ANZ Ins Cas 61-484; [2000] QCA 524.
 
65
Ferrcom Pty Ltd v. Commercial Union Assurance Co of Australia Ltd (1993) 176 CLR 332; 7 ANZ Ins Cas 61-156; [1993] HCA 5.
 
66
Gibbs Holdings Pty Ltd v. Mercantile Mutual Insurance (Aust) Ltd (2002) 11 ANZ Ins Cas 61-484; [2000] QCA 524.
 
67
Antico v. Heath Fielding Australia Pty Ltd (1997) 188 CLR 652; 9 ANZ Ins Cas 61-371; [1997] HCA 3.
 
68
Antico v. Heath Fielding Australia Pty Ltd (1991) 188 CLR 652 at 674 – 675; [1997] HCA 35.
 
69
Moltoni Corp Pty Ltd v. QBE Insurance Ltd (2001) 205 CLR 14; 11 ANZ Ins Cas 61-512; [2002] HCA 73.
 
70
Moltoni Corp v. QBE Insurance Ltd (2001) 205 CLR 14; [2001] HCA 73.
 
71
For a comprehensive overview of the decisions on this topic, see Mead (2009), p. 1.
 
72
Kirby (2011), p. 11.
 
73
Tiep Thi To v. Australian Associated Motor Insurers Ltd (2001) 11 ANZ Ins Cas 61-490; [2001] VSCA 48.
 
74
Tiep Thi To v. Australian Associated Motor Insurers Ltd (2001) 11 ANZ Ins Cas 61-490; [2001] VSCA 48 at [23].
 
75
CGU Insurance Ltd v. AMP Financial Planning Pty Ltd (2007) 235 CLR 1; 14 ANZ Ins Cas 61-739; [2007] HCA 36.
 
76
CGU Insurance Ltd v. AMP Financial Planning Pty Ltd (2007) 235 CLR 1; 14 ANZ Ins Cas 61-739; [2007] HCA 36 at [72].
 
77
CGU Insurance Ltd v. AMP Financial Planning Pty Ltd (2007) 235 CLR 1; 14 ANZ Ins Cas 61-739; [2007] HCA 36 at [139].
 
78
For an overview of these cases, see Bowley (2016), p. 194.
 
79
Insurance Contracts Act 1984 (Cth) s 11.
 
80
See now Insurance Contracts Act 1984 (Cth) s 13(4).
 
81
For commentary on these amendments, see Box and Webster (2013), p. 114; Tarr (2015b), p. 68.
 
82
Hannover Life Re of Australasia Ltd v. Dargan [2013] NSWCA 57 at [16].
 
83
Lazarevic v. United Super Pty Ltd [2014] NSWSC 96 at [147].
 
84
Wyllie v. National Mutual Life Association of Aust Ltd (1997) 217 ALR 324; [1997] NSWSC 146.
 
85
Wyllie v. National Mutual Life Association of Aust Ltd (1997) 217 ALR 324 at 342; [1997] NSWSC 146.
 
86
Sayseng v. Kellogg Superannuation Pty Ltd and Anor [2003] NSWSC 945.
 
87
Sayseng v. Kellogg Superannuation Pty Ltd and Anor [2003] NSWSC 945 at [93] – [97]; upheld on appeal: Hannover Life Re of Australasia Ltd v. Sayseng (2005) 13 ANZ Ins Cas 90-123; [2005] NSWCA 214.
 
88
Dumitrov v. SC Johnson and Son Superannuation Pty Ltd (No 2) (2007) 14 ANZ Ins Cas 61-722; [2007] NSWSC 42.
 
89
Wheeler v. FSS Trustee Corp Atf First State Superannuation Scheme [2016] NSWSC 534.
 
90
Wheeler v. FSS Trustee Corp Atf First State Superannuation Scheme [2016] NSWSC 534 at [300].
 
91
Wheeler v. FSS Trustee Corp Atf First State Superannuation Scheme [2016] NSWSC 534 at [366] – [368].
 
Literature
Enright I, Merkin R (2015) Sutton on insurance law, 4th edn. Thomson Reuters, Toronto
Gwynn M, Laugesen A (2017) Oxford Concise Australian Dictionary, 6th edn. Oxford University Press, Oxford
Macquarie Dictionary (2017) Macquarie Dictionary: Australia’s National Dictionary, 7th edn. Macquarie University, Macquarie Park
Mann P (2016a) Mann’s Annotated Insurance Contracts Act, 7th edn. Thomson Reuters, Toronto
Pynt G (2017) Australian Insurance Law: a first reference, 4th edn. LexisNexis, New York
Bell J (2012) When will a flood be classified as a “flood”? A review of the Insurance Contracts Act reform. Insur Law J 23:312
Bowley R (2016) The progressive evolution of Australian insurers’ duty of utmost good faith to third party claimants. Insur Law J 27:194
Box R, Webster T (2013) Evolution not revolution: Insurance Contracts Amendment Act finally passed. Aust Insur Law Bull 28(8):114
Godfrey K (2002) The duty of utmost good faith: the great unknown of modern insurance law. Insur Law J 14:1
Hawke F (1994) Utmost good faith - what does it really mean? Insur Law J 6:91
Kirby M (2011) Australian insurance contract law: out of the chaos – a modern, just and proportionate reforming statute. Insur Law J 22:11
Mann P (2016b) The elusive second quadrant of utmost good faith: what is the scope of an insurer’s pre-contractual duty of utmost of good faith? Insur Law J 27:176
Mann P, Drummond S (2017) Utmost good faith, unconscionable conduct and other notions of fairness - where are we now? Insur Law J 29:10
McGivern B (2013) Coming to the party: the evolution of post-contractual duties of utmost good faith under the ICA. Insur Law J 24:159
Mead P (2009) Notifications under claims made and notified professional indemnity insurance policies and the effect of ss 54 and 40 of the Insurance Contracts Act 1984 (Cth). Insur Law J 20:1
Merkin R (2012) Unfair terms in insurance contracts: a solution in search of a problem. Insur Law J 23:272
Nattrass R (2012) Extending the unfair contract terms laws to insurance contracts: is the duty of good faith fair enough? Insur Law J 23:299
Tarr J-A (2001) Disclosure under the Prescribed Insurance Contracts Regime: Section 35 of the Insurance Contracts Act 1984 and Consumer Protection Revisited. Aust Bus Law Rev 29:198
Tarr J-A (2015a) Insurance contract disclosure - an uncertain balance. Insur Law J 26:110
Tarr J-A (2015b) Accountability 30 years on: Insurance Contracts Act Reform. Aust Bus Law Rev 43:68
Traves S (2012) Utmost good faith, reliance upon and notification of terms: the obligations of insurers and the rights of insureds. Insur Law J 23:4
Commonwealth of Australia, Inquiry into flood insurance and related matters: Final Report, September 2011, Natural Disaster Insurance Review
Antico v. Heath Fielding Australia Pty Ltd (1997) 188 CLR 652 9 ANZ Ins Cas 61-371 [1997] HCA 3
Austcan Investments Pty Ltd v. Sun Alliance Insurance Ltd (1992) 7 ANZ Ins Cas 61-116
Burns v. MMI-CMI Insurance Ltd (1994) 8 ANZ Ins Cas 61-287
CE Heath Underwriting and Insurance (Aust) Pty Ltd v. Edwards Dunlop & Co Ltd (1993) 176 CLR 535 (1993) 7 ANZ Ins Cas 61-165 [1993] HCA 21
CGU Insurance Ltd v. AMP Financial Planning Pty Ltd (2007) 235 CLR 1 14 ANZ Ins Cas 61-739 [2007] HCA 36
CIC Insurance Ltd v. Barwon Region Water Authority (1998) ANZ Ins Cas 61-425 [1998] VSCA 77
Davis v. Westpac Life Insurance (2008) 15 ANZ Ins Cas 80-132 [2007] NSWCA 175
Dumitrov v. SC Johnson and Son Superannuation Pty Ltd and Anor [2006] NSWSC 1372
Entwells Pty Ltd v. National & General Insurance Co Ltd (1991) 6 ANZ Ins Cas 61-059
Ferrcom Pty Ltd v. Commercial Union Assurance Co of Australia Ltd (1993) 176 CLR 332 7 ANZ Ins Cas 61-156 [1993] HCA 5
Gibbs Holdings Pty Ltd v. Mercantile Mutual Insurance (Aust) Ltd (2002) 11 ANZ Ins Cas 61-484 [2000] QCA 524
GIO General Ltd v. Wallace (2001) 11 ANZ Ins Cas 61-506 [2001] NSWCA 299
Hams v. CGU Insurance Ltd (2002) 12 ANZ Ins Cas 61-525 [2002] NSWSC 273
Hannover Life Re of Australasia Ltd v. Dargan [2013] NSWCA 57
Hannover Life Re of Australasia Ltd v. Sayseng (2005) 13 ANZ Ins Cas 90-123 [2005] NSWCA 214
Hitchens v. Zurich Australia Ltd (2015) 18 ANZ Ins Cas 62-076 [2015] NSWSC 825
Lazarevic v. United Super Pty Ltd [2014] NSWSC 96
Lindsay v. CIC Insurance (1989) 16 NSWLR 673 5 ANZ Ins Cas 60-913
Lockwood & Lockwood v. Insurance Australia Ltd (2010) 16 ANZ Ins Cas 61-843 [2010] SASC 140
Marsh v. CGU Insurance Ltd t/as Commercial Union Insurance (2004) 13 ANZ Ins Cas 61-594 [2004] NTCA 1
Messagemate v. (Aust) Pty Ltd v National Credit Insurance (Brokers) Pty Ltd (2002) 85 SASR 303 (2003) 12 ANZ Ins Cas 61-546 [2002] SASC 327
Michail v. Australian Alliance Insurance Co Ltd [2013] QDC 284
Michail v. Australian Alliance Insurance Co Ltd [2014] QCA 138
Moltoni Corp Pty Ltd v. QBE Insurance Ltd (2001) 205 CLR 14 11 ANZ Ins Cas 61-512 [2002] HCA 73
NRG Victory Australia v. Hudson (2003) 13 ANZ Ins Cas 90-121 [2003] WASCA 291
Permanent Trustee Australia Ltd v. FAI General Insurance (2003) 214 CLR 514 12 ANZ Ins Cas 61-565 [2003] HCA 25
Prepaid Insurance v. Atradius (No 2) [2014] NSWSC 21
Prepaid Services Pty Ltd & Ors v. Atradius Trade Credit Insurance NV (2012) 17 ANZ Ins Cas 61-937 [2012] NSWSC 608
Prepaid Services Pty Ltd & Ors v. Atradius Trade Credit Insurance NV (2013) 17 ANZ Ins Cas 61-981 [2013] NSWCA 252
Sayseng v. Kellogg Superannuation Pty Ltd and Anor [2003] NSWSC 945
Schaffer v. Royal & Sun Alliance Life Assurance Aust Ltd (2003) 12 ANZ Ins Cas 90-116 [2003] QCA 182
Suncorp General Insurance Ltd v. Cheihk (1999) 10 ANZ Ins Cas 61-442 [1999] NSWCA 238
Suncorp Metway Insurance Limited v. Mason Place Pty Ltd [2011] QDC 209
Tiep Thi To v. Australian Associated Motor Insurers Ltd (2001) 11 ANZ Ins Cas 61-490 [2001] VSCA 48
Von Braun v. Australian Associated Motor Insurers (1998) 10 ANZ Ins Cas 61-419 [1998] ACTSC 122
Wheeler v. FSS Trustee Corp Atf First State Superannuation Scheme [2016] NSWSC 534
Wyllie v. National Mutual Life Association of Aust Ltd (1997) 217 ALR 324 [1997] NSWSC 146
Metadata
Title
Transparency in the Insurance Contract Law of Australia
Author
Robin Bowley
Copyright Year
2019
Publisher
Springer International Publishing
Book
Transparency in Insurance Contract Law

Print ISBN: 978-3-030-31197-1

Electronic ISBN: 978-3-030-31198-8

Copyright Year: 2019

DOI
https://doi.org/10.1007/978-3-030-31198-8_23

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