Insurance Contracts Regulations (Amendment) (Cth)

Statutory Rules 1994

No. 327 1

__________________

Insurance Contracts Regulations 2(Amendment)

I, The Governor-General of the Commonwealth of Australia, acting with the advice of the Federal Executive Council and under section 4 of the Acts Interpretation Act 1901, make the following Regulations under the Insurance Contracts Act 1984.

Dated 16 September 1994.

 BILL HAYDEN

 Governor-General

By His Excellency’s Command,

PAUL ELLIOTT

Parliamentary Secretary to the Treasurer for

the Treasurer

____________

1.   Commencement

1.1   Subject to subregulation 1.2, these Regulations commence on the date of commencement of the amendment contained in item 11 of the Schedule to the Insurance Laws Amendment Act (No. 2) 1994.

1.2   Regulation 5 commences at the end of 60 days after the day on which these Regulations are notified in the Gazette.

[NOTE: Regulation 5 is made for the purposes of section 35 of the Act; under subsection 35 (3), regulations made for those purposes commence at the end of 60 days after the day on which they are notified in the Gazette.]

2.   Amendment

2.1   The Insurance Contracts Regulations are amended as set out in these Regulations.

3.   New regulation 2A

3.1   After regulation 2, insert:

Definition of “consumer credit insurance”

 “2A. For the purposes of paragraph (b) of the definition of ‘consumer credit insurance’ in subsection 11 (1) of the Act, the class of contracts referred to in regulation 21 is identified as consumer credit insurance.

[NOTE: For the purposes of paragraph (a) of the  definition of ‘consumer credit insurance’ (a class of contracts declared to be a class of contracts to which Division 1 of Part V of the Act applies), see  regulation 21.]”.

4.Regulation 3 (Prescribed form of writing to inform insured of duty of disclosure)

4.1   Paragraph 3 (a):

Omit “the Schedule;”, substitute “Schedule 1;”.

4.2   Paragraph 3 (b):

Omit “the Schedule.”, substitute “Schedule 1.”.

5.Regulation 21 (Prescribed contracts)

5.1   Regulation 21:

Omit “in relation”.

5.2   Paragraph 21 (d):

Omit “party,”, substitute “party.”.

5.3   Regulation 21:

Omit all the words and paragraphs after paragraph (d).

6.   New regulations 33, 34 and 35

6.1   After regulation 32, insert:

Notices under section 71A (2) of the Act—prescribed matters

 “33.(1)  For the purposes of subsection 71A (2) of the Act, the manner in which a person must ensure that a written notice of a kind referred to in that subsection is freely available is by ensuring that the notice is:

• (a)

  readily available at all of the person’s points of sale of consumer credit insurance; and

• (b)

  handed to each member of the public:

  • (i)

    who expresses an interest in, or who reveals a need for, consumer credit; or

  • (ii)

    with whom the person concludes a sale of consumer credit insurance; and

• (c)

  consistent with the person’s duty, under section 13 of the Act, of the utmost good faith.

 “(2)For the purposes of paragraph 71A (2) (a) of the Act, a written notice must be in a form that includes the following material:

• (a)

  a brief explanation of the purposes of consumer credit insurance;

• (b)

  an outline statement of the general areas covered by the policy, or kind of policy, to which the notice relates;

• (c)

  a statement to the effect that it is important for the insured to read the policy carefully in order to understand the extent of cover provided by the policy, and its limitations;

• (d)

  subject to subregulation (3)—a statement to the effect that a person who applies for, or obtains, consumer credit is not required to purchase consumer credit insurance;

• (e)

  information about:

  • (i)

    the insurer’s internal procedures for resolving disputes between an insured person and the insurer; and

  • (ii)

    if applicable, the insurance industry’s arrangements for resolving disputes of that kind;

• (f)

  the insurer’s name and address.

 “(3)The statement specified in paragraph (2) (d) is not required if it would be an incorrect statement of the law of the relevant State.

 “(4) The written notice must:

• (a)

  be written in a style that is as clear and straightforward as its subject matter reasonably permits; and

• (b)

  be in clearly legible print.

 “(5) For the purposes of paragraph 71A (2) (b) of the Act, the prescribed terms for a written notice under subsection 71A (2) of the Act to explain the general nature of insurance of the kind to which the notice relates are terms to the effect that:

• (a)

  the insurance cover is provided in respect of losses caused by certain contingencies (giving appropriate examples, such as unemployment, death or disability); and

• (b)

  the extent of loss is measured by reference to the liability of the insured under the credit agreement to which the insurance applies.

Notices under section 71A (3) of the Act

 “34.(1)  For the purposes of paragraph 71A (3) (a) of the Act, the Form set out in Schedule 2 is prescribed as the form of written notice referred to in subsection 71A (3) of the Act.

 “(2) The form of the written notice must:

• (a)

  have a minimum length of 200 millimetres and a minimum width of 160 millimetres; and

• (b)

  be in clearly legible print; and

• (c)

  be clearly distinguishable from any other documents to which it is attached or of which it forms a part.

 “(3) For the purposes of paragraph 71A (3) (b) of the Act, the information that a written notice referred to in that subsection must contain is the information stated in the Form set out in Schedule 2.

 “(4) In spite of subregulation (3), a written notice must not include information that is inapplicable if its inclusion would be, or might reasonably be regarded as being, misleading.

EXAMPLES: A reference to agent’s commission is inapplicable if no agent’s commission has been paid; the use of the term ‘unemployment’ in the ‘information’ box is not required if the term ‘involuntary unemployment’ more accurately describes the relevant insurance cover so as to make the term ‘unemployment’ inapplicable.

 “(5) If an employee or agent of an insurer arranges or makes a contract of consumer credit insurance with the insured, or an agent of the insured, in person, the insurer must ensure that the insured or agent of the insured signs and dates the declaration at the foot of the form.

Notices under section 71A (5) of the Act

 “35.(1)  For the purposes of paragraph 71A (5) (a) of the Act, a written notice must be in a form that includes the following material:

• (a)

  a statement that the person to whom the notice is sent purchased consumer credit insurance in respect of the credit agreement to which the insurance relates;

• (b)

  a statement to the effect that there may be limitations to the insurance cover and that the insured should refer to the policy documents for full details of the insurance cover;

• (c)

  if the policy was a single premium policy—a statement of the total premium paid;

• (d)

  a notice of the ‘cooling-off’ period and a statement of the method of cancellation of the policy during that period;

• (e)

  information about:

  • (i)

    the insurer’s internal procedures for resolving disputes between an insured person and the insurer; and

  • (ii)

    if applicable, the insurance industry’s arrangements for resolving disputes of that kind;

• (f)

  contact details (including the telephone number) of a contact person for any queries in relation to the insurance;

• (g)

  a completed information box in the following format:

TABLE:

SOME IMPORTANT BENEFIT LIMITS ON YOUR POLICY

Unemployment	Maximum number of claims ..............	Benefit limit......... (e.g. insurer will meet instalments for .... months per claim)
Disability	Maximum number of claims ..............	Benefit limit ............ (e.g. insurer will meet instalments for .... months per claim)
Death	Cover Available/ Not Available

 “(2) The written notice must:

• (a)

  be written in a style that is as clear and straightforward as its subject matter reasonably permits; and

• (b)

  be in clearly legible print; and

• (c)

  not be accompanied by any promotional material; and

• (d)

  unless a copy of the policy document has already been given to the person to whom the notice is sent—be accompanied by that document.”.

7.Schedule (Prescribed forms of writing to be used for informing insureds of general nature and effect of duty of disclosure)

7.1   Schedule:

Omit “SCHEDULE”, substitute “SCHEDULE 1”.

8.New Schedule 2

8.1   Add at the end:

      SCHEDULE 2Regulation 34

CONSUMER CREDIT INSURANCE

  

IMPORTANT INFORMATION ABOUT

CONSUMER CREDIT INSURANCE

  

Provided at the request of the Insurance and Superannuation Commission, the Federal Government Agency which has responsibility for supervision of the insurance industry.

1.Before you buy a consumer credit insurance (CCI) policy, you should:

• *

  find out what the policy covers and what it does not cover. Carefully read the Table below and ask the seller if you do not understand it;

• *

  be aware that if you are unable to make your loan repayment due to a medical condition or disability that you knew about at the time you took out the policy, the insurer may not pay your claim;

• *

  read the policy carefully to understand when the policy will cover your loan repayment and when it will not.

Table:

Some important benefit limits on your policy

Unemployment	Maximum number of claims ..............	Benefit limit......... (e.g. insurer will meet instalments for .... months per claim)
Disability	Maximum number of claims ..............	Benefit limit ............ (e.g. insurer will meet instalments for .... months per claim)
Death	Cover Available/ Not Available

SCHEDULE 2— continued

2.If you decide to buy CCI, you must:

• *

  answer all questions on the application form truthfully and accurately; and

• *

  tell the insurer everything which you know about that may increase the likelihood of your making a CCI claim in the future.

 (If you don't do that, the insurer may not have to pay claims            under your policy)

3. Be aware that you may be able to arrange CCI through a different insurer.Note also CCI may only be available as part of a loan package.

4. Some of your insurance premium (..%) and/or (nature of other benefit) is paid to the seller of the policy as commission.

5.Cooling-off period. After you buy CCI you will receive a letter confirming you have purchased the policy.  If you change your mind you will then have ... days to cancel the policy and obtain a full refund.

DECLARATION

I/we understand ) Please confirm by

that I/we cannot ) signing here:

be required to )         _________________ ...../..../......

buy this insurance )         _________________ ...../..../......

  (signature(s)) (date)

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NOTES

1. Notified in the Commonwealth of Australia Gazette on 23 September 1994.

2. Statutory Rules 1985 No. 162 as amended by 1990 No. 444.