Insurance Law

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This article discusses the processes associated with insurance law in Australia and the responsibilities of individuals and corporations seeking insurance, in addition to the protections available for them.


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Insurance is generally described as financial protection against losses such as theft, disaster, or illness, in exchange for payment of a regular premium (or fee). Within NSW, some insurance is mandated by the government such as third-party motor vehicle ‘personal injury’ insurance, whereas others are simply encouraged, such as private health insurance.1


The insurance available is typically divided into three categories: life, health, and general insurance. Life insurance includes policies that provide payment to the individual upon instances of death, disability, or severe trauma. Health insurance covers payment and expenses regarding the provision of hospital and medical services. General insurance is a broader form of insurance and acts to cover matters that are not included within the scope of life or health insurance, such as product liability, sickness, or travel. 2






The contract between the insurer and the applicant (the individual or corporation seeking insurance coverage) is cemented within an insurance policy.3 These are embodied in a special category of contracts that operate on the principle of ‘utmost good faith’4 between the parties.


The Insurance Contracts Act 1984 (Cth)5 (the Act) highlights the applicant’s duty of disclosure with respect to the insurance being obtained. Section 21 of this Act outlines that the applicant must not withhold any relevant information from the insurer but rather, ensure they disclose all the known facts that are required for the application. Moreover, section 22 mandates that the applicant must be informed of the effect of their disclosure and what it entails by the insurer, both clearly and in writing.


The Act further serves to regulate the information and notices that must be provided to the applicant in specific circumstances by the insurer such for cancellation of a contract, refusal to renew a contract of insurance, etc.6 






Underwriters are an integral part of the application process for insurance, as they provide expert advice on whether the application should be accepted and on what terms. They follow certain steps throughout the process and rely on informed professional judgment and specialist advice from medical officers and reinsurance companies.7 The first step an underwriter must take is confirming the applicant’s standard premium rate risk classification and following this, they underwrite by assessing other risk factors. For example, these risks include the medical history of the applicant, their current and expected state of health, the applicant’s genetics and how it will impact their quality of life.8 Non-medical risks include hazardous occupations, involvement in sports and other potentially harmful activities.


Actuaries are additional financial advisers in insurance matters. They primarily focus on general insurance, superannuation, and investment issues. The main function of an actuary is to produce premium rate tables that are standardised to reflect the age, gender, and smoker status of the applicants (for example, ‘age 25, female, non-smoker’).9 Creating such tables requires informed judgment as it can be extremely subjective and dependent on a myriad of data retrieved from different sources.






If there is conflict throughout the application process or disagreements with insurers, there are limited avenues of redress available for applicants. In instances where there is contention surrounding the underwriting decision, the applicant may submit an internal complaint to the insurer or escalate the matter with a relevant agency such as the Human Rights and Equal Opportunity Commission. Yet, there is currently no independent organisation that handles complaints regarding underwriting in Australia.10 Therefore, no mechanism has been implemented to grapple with the potential issues that may arise in insurance grants and applications.


However, the Australian Financial Complaints Authority (AFCA) is a not-for-profit organisation that has been established to address complaints from consumers and business alike, regarding their products and services such as the insurance they provide.11 This acts as an external dispute resolution scheme which aids individuals or corporations in escalating their complaints and having their issues heard.


The matters they handle include issues and complaints regarding general insurance, including consumer credit insurance, motor vehicle insurance and travel insurance. However, they do not have jurisdiction over matters such as worker’s compensation, compulsory third-party insurance, or homeowner’s warranty.12


Moreover, the Australian Prudential Regulatory Authority (APRA) is an additional body that has been established to assist with other matters and issues arising in other types of insurance, such as life insurance and superannuation. This body operates independently and monitors national banks and institutions as an unbiased supervisor.13






Thus, insurance in Australia is multifaceted and contains various processes and procedures. Although there is not a single dispute resolution mechanism, individuals and corporations can be made aware of their rights and obligations under insurance law and take the appropriate paths available to rectify the issue.


Comasters is able to advise clients on Insurance matters and assist in potential issues that may arise.



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1 NSW Fair trading, NSW Government, Insurance, (N/A).

2 Australian Law Reform Commission, Australian Government, Personal Insurance in Australia (28 July 2010).

3 Ibid.

4 Ibid.

5 Insurance Contracts Act 1984 (Cth).

6 Australian Law Reform Commission, Australian Government, Personal Insurance in Australia (28 July 2010).

7 Ibid.

8 Ibid.

9 Ibid.

10 Ibid.

11 Australian Financial Complaints Authority, Insurance Complaints (N/A).

12 Ibid.

13 Australian Law Reform Commission, Australian Government, Personal Insurance in Australia (28 July 2010).



© Comasters May 2022.


Important: This is not advice. Clients should not act solely on the basis of the material contained in this paper. Our formal advice should be sought before acting on any aspect of the above information.

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