Insurance Contracts Amendment Act 2012

Administered by Department of the Treasury

Legislation au C2012A00041 In force Act

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Insurance Contracts Amendment Act 2012

 

No. 41, 2012

 

 

 

 

 

An Act to amend the Insurance Contracts Act 1984, and for related purposes

 

 

Contents

1 Short title

2 Commencement

3 Schedule(s)

Schedule 1—Definition of flood

Insurance Contracts Act 1984

Schedule 2—Key Facts Sheets

Insurance Contracts Act 1984

 

 

 

Insurance Contracts Amendment Act 2012

No. 41, 2012

 

 

 

An Act to amend the Insurance Contracts Act 1984, and for related purposes

[Assented to 15 April 2012]

The Parliament of Australia enacts:

1  Short title

  This Act may be cited as the Insurance Contracts Amendment Act 2012.

2  Commencement

  This Act commences on the day this Act receives the Royal Assent.

3  Schedule(s)

  Each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.


Schedule 1—Definition of flood

 

Insurance Contracts Act 1984

1A  Paragraph 11(10)(a)

After “37”, insert “, 37C”.

1B  Paragraph 11(10)(c)

After “37”, insert “, 37C”.

1  After Division 1 of Part V

Insert:

Division 1A—Definition of flood

37A  Application of this Division

 (1) This Division applies in relation to a contract of insurance (in this Division called a prescribed contract) if:

 (a) the contract is included in a class of contracts of insurance declared by the regulations to be a class of contracts in relation to which this Division applies; and

 (b) the contract was entered into after the day on which those regulations were made.

 (2) However, this Division does not apply in relation to a prescribed contract at any time before the transition time for the prescribed contract.

 (3) Also, this Division does not affect the operation of a prescribed contract in relation to an event that occurred before the transition time for the prescribed contract.

 (4) In this section:

transition time, for a prescribed contract, means the time when regulations made for the purposes of paragraph (1)(a), declaring a class of contracts of insurance including the contract to be a class of contracts in relation to which this Division applies, commence.

37B  Meaning of flood in prescribed contracts etc.

 (1) The regulations must define the meaning of flood for the purposes of this Division.

 (2) In a prescribed contract (or a notice or other document or information given by the insurer in relation to a prescribed contract):

 (a) the word flood has the meaning given by the regulations; and

 (b) other parts of speech or grammatical forms of that word have corresponding meanings.

 (3) Subsection (2) has effect in relation to a prescribed contract (or a notice or other document or information given by the insurer in relation to a prescribed contract) even if the meaning of the word flood (or other parts of speech or grammatical forms of that word) provided by the contract (or the notice or other document or information) is different from the meaning of flood given by the regulations.

37C  Insurer must clearly inform insured whether prescribed contract provides insurance cover in respect of flood

  Before entering into a prescribed contract, the insurer must clearly inform the insured in writing whether the contract provides insurance cover in respect of loss or damage caused by, or resulting from, flood as defined by the regulations.

37D  Circumstances in which prescribed contract is taken to provide insurance cover etc. in respect of flood

 (1) This section applies in relation to a prescribed contract that includes provisions (flood provisions) that provide insurance cover in respect of loss or damage caused by, or resulting from, one or more flood events (whether or not the contract expressly provides insurance cover for flood as defined by the regulations).

 (2) The flood provisions of the prescribed contract are taken to provide insurance cover in respect of loss or damage caused by, or resulting from, flood as defined by the regulations.

 (3) The insurer under the prescribed contract may not refuse to pay a claim in respect of loss or damage caused by, or resulting from, the happening of a flood event by reason only that, but for subsection (2), insurance cover in respect of loss or damage caused by, or resulting from, that event was not provided by the contract.

 (4) If the prescribed contract includes provisions (also flood provisions) that provide different maximum amounts of insurance cover in respect of different flood events, those provisions are taken to provide a maximum amount of insurance cover in respect of loss or damage caused by, or resulting from, flood, as defined by the regulations, equal to the highest maximum amount (the maximum flood cover amount) of insurance cover provided by those provisions in respect of any flood event.

 (5) The insurer under the prescribed contract may not refuse to pay an amount equal to the maximum flood cover amount in relation to a claim in respect of loss or damage caused by, or resulting from, the happening of a flood event by reason only that, but for subsection (4), the maximum amount of insurance cover provided by the contract in respect of loss or damage caused by, or resulting from, that event was less than the maximum flood cover amount.

 (5A) To avoid doubt, this section does not affect the operation of any provisions of a prescribed contract that are not flood provisions.

 (6) This section has effect in relation to a prescribed contract whether or not the insurer clearly informed the insured of the purported effect of the flood provisions in the contract.

 (7) In this section:

flood event means an event that is, or would be, a flood as defined by the regulations.

37E  Division not to affect provision of insurance cover for certain events

  If:

 (a) a prescribed contract is expressed to provide insurance cover in respect of loss or damage caused by, or resulting from, a particular event; and

 (b) the effect of another provision of this Division is that the contract would not provide that insurance cover;

then that provision is taken not to have that effect.

2  Subsection 38(3)

After “37”, insert “, 37C”.


Schedule 2—Key Facts Sheets

 

Insurance Contracts Act 1984

1  Subsection 11(1)

Insert:

engage in conduct means:

 (a) do an act; or

 (b) omit to perform an act.

2  Subsection 11(1)

Insert:

this Act includes the regulations.

3  Division 1 of Part IV (heading)

Repeal the heading, substitute:

Division 1—Insured’s duty of disclosure

4  Division 2 of Part IV (heading)

Repeal the heading, substitute:

Division 2—Misrepresentations by insured

5  Division 3 of Part IV (heading)

Repeal the heading, substitute:

Division 3—Remedies for non‑disclosure and misrepresentations by insured

6  At the end of Part IV

Add:

Division 4—Key Facts Sheets

33A  Application of this Division

  This Division applies in relation to:

 (a) a contract of insurance (in this Division called a prescribed contract) that is included in a class of contracts of insurance declared by the regulations to be a class of contracts in relation to which this Division applies; and

 (b) a proposed or possible contract of insurance (in this Division called a potential prescribed contract) that would, if entered into, be a prescribed contract.

33B  What is a Key Facts Sheet?

  For the purposes of this Division, a Key Facts Sheet for a prescribed contract, or a potential prescribed contract, is a document:

 (a) that contains the information relating to the prescribed contract, or the potential prescribed contract, that is required by the regulations; and

 (b) that complies with any other requirements prescribed by the regulations.

33C  Insurer’s obligation to provide Key Facts Sheet

 (1) An insurer must provide a Key Facts Sheet for a prescribed contract, or a potential prescribed contract, in the circumstances, and in the manner, prescribed by the regulations.

 (2) Regulations made for the purposes of subsection (1) may prescribe circumstances in which a Key Facts Sheet may or must be provided by electronic means. The regulations have effect despite subsection 77(1).

 (3) The regulations may prescribe exceptions to the requirement in subsection (1).

Note: A defendant bears an evidential burden in relation to a matter prescribed for the purposes of subsection (3) (see subsection 13.3(3) of the Criminal Code).

 (4) The following provisions do not apply in relation to the requirement in subsection (1):

 (a) subsection 11(11);

 (b) section 69.

Offence

 (5) An insurer commits an offence if:

 (a) the insurer is subject to a requirement under subsection (1); and

 (b) the insurer engages in conduct; and

 (c) the conduct contravenes the requirement.

Penalty: 150 penalty units.

33D  Provision of Key Facts Sheet does not constitute clearly informing

  For the purposes of this Act, the provision by an insurer of a Key Facts Sheet to a person does not constitute clearly informing the person of the matters contained in the Key Facts Sheet.

 

 

 

[Minister’s second reading speech made in—

House of Representatives on 23 November 2011

Senate on 20 March 2012]

(251/11)

 

Overview

The Insurance Contracts Amendment Act 2012 was enacted by the Parliament of Australia to amend the Insurance Contracts Act 1984, addressing specific gaps in the regulatory framework concerning insurance contracts. The Act was assented to on 15 April 2012, introducing provisions to clarify and regulate the definition and disclosure of flood-related insurance coverage, as well as to introduce the requirement for insurers to provide Key Facts Sheets to policyholders. This legislative amendment aims to enhance transparency and consumer protection in the insurance industry by ensuring that policyholders are adequately informed about the coverage provided by their insurance contracts, particularly in relation to flood events. The Act mandates that insurers must clearly inform policyholders whether their insurance contract covers losses or damages caused by flood events and requires the definition of "flood" to be set out in regulations, ensuring consistency across the industry. Furthermore, it introduces the concept of Key Facts Sheets, which must be provided to policyholders and potential policyholders, containing essential information about the insurance contract as prescribed by regulations.

Scope and Application

The Insurance Contracts Amendment Act 2012 amends the Insurance Contracts Act 1984, introducing new provisions regarding flood insurance coverage and the provision of Key Facts Sheets. The Act applies to contracts of insurance that are included in a class of contracts declared by regulations, with specific focus on flood insurance. These contracts must be entered into after the relevant regulations are made, and the provisions do not apply retroactively. The Act also provides that the definition of "flood" in these contracts must align with the regulatory definition, and insurers must inform policyholders in writing whether their contracts provide coverage for flood-related losses or damages. Additionally, the Act mandates that insurers provide Key Facts Sheets to policyholders, which are documents containing required information about the insurance contract, to be provided in the manner and circumstances prescribed by regulations. These Key Facts Sheets do not substitute for the explicit communication of the information they contain to the policyholder. The Act extends its application through subordinate regulations which declare classes of contracts and define terms such as "flood". The Act applies at the Commonwealth level, impacting entities and individuals involved in the insurance industry across Australia.

Key Provisions

The Insurance Contracts Amendment Act 2012 (C2012A00041) makes significant changes to the Insurance Contracts Act 1984 by introducing new definitions, obligations, and requirements for insurers and insureds in relation to insurance contracts, particularly those involving flood insurance and Key Facts Sheets. Section 1A and 1B of the Act insert new references to sections 37 and 37C in the definition of certain terms within the Insurance Contracts Act 1984, which will have a bearing on how insurance contracts are interpreted and applied. The Act imposes several obligations on insurers. Most notably, under Division 1A of Part V, insurers must clearly inform insureds in writing whether a prescribed insurance contract provides coverage for losses or damages caused by or resulting from flood events, as defined by regulations (section 37C). Additionally, insurers must provide a Key Facts Sheet for prescribed or potential prescribed insurance contracts, detailing the necessary information as required by regulations (section 33B). The regulations may prescribe the circumstances and manner in which these sheets must be provided, including the option for electronic delivery (section 33B(2)). The Act also outlines specific consequences for non-compliance. Insurers who fail to provide the required Key Facts Sheet when obligated to do so commit an offence, subject to a penalty of 150 penalty units (section 33C(5)). Furthermore, the Act clarifies that the provision of a Key Facts Sheet does not satisfy the insurer's obligation to clearly inform the insured of the matters contained within it (section 33D). Failure to comply with these obligations can lead to both civil and criminal consequences, underscoring the importance of adherence to the Act's requirements.

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.