Contents
- 12 This Part not to be read down
- 13 The duty of the utmost good faith
- 14 Parties not to rely on provisions except in the utmost good faith
- 14A Powers of ASIC—insurer’s failure to comply with the duty of the utmost good faith in relation to handling or settlement of claims
- 15 Certain other laws not to apply
Part II · The duty of the utmost good faith
12This Part not to be read down#
The effect of this Part is not limited or restricted in any way by any other law, including the subsequent provisions of this Act, but this Part does not have the effect of imposing on an insured, in relation to the disclosure of a matter to the insurer, a duty other 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.
13The duty of the utmost good faith#
(1)A contract of insurance is a contract based on the utmost good faith and there is implied in such a contract a provision requiring each party to it to act towards the other party, in respect of any matter arising under or in relation to it, with the utmost good faith.
(2)A failure by a party to a contract of insurance to comply with the provision implied in the contract by subsection (1) is a breach of the requirements of this Act.
(2A)An insurer under a contract of insurance contravenes this subsection if the insurer fails to comply with the provision implied in the contract by subsection (1).
Civil penalty: 5,000 penalty units.
(3)A reference in this section to a party to a contract of insurance includes a reference to a third party beneficiary under the contract.
(4)This section applies in relation to a third party beneficiary under a contract of insurance only after the contract is entered into.
14Parties not to rely on provisions except in the utmost good faith#
(1)If reliance by a party to a contract of insurance on a provision of the contract would be to fail to act with the utmost good faith, the party may not rely on the provision.
(2)Subsection (1) does not limit the operation of section 13.
(3)In deciding whether reliance by an insurer on a provision of the contract of insurance would be to fail to act with the utmost good faith, the court shall have regard to any notification of the provision that was given to the insured, whether a notification of a kind mentioned in section 37 or otherwise.
14APowers of ASIC—insurer’s failure to comply with the duty of the utmost good faith in relation to handling or settlement of claims#
(1)This section applies if an insurer under a contract of insurance has failed to comply with the duty of the utmost good faith in the handling or settlement of a claim or potential claim under the contract.
(2)Despite any provision of Chapter 7 of the Corporations Act 2001 or any regulation made under that Chapter, ASIC may exercise its powers under Subdivision C of Division 4 of Part 7.6 of that Act or Subdivision A of Division 8 of that Part in relation to the insurer as if the insurer’s failure to comply with the duty of the utmost good faith were a failure by the insurer to comply with a financial services law (within the meaning of the Corporations Act 2001).
Note: Subdivision C of Division 4 of Part 7.6 of the Corporations Act 2001 deals with variation, suspension and cancellation of an Australian financial services licence, and Subdivision A of Division 8 of that Part deals with banning persons from providing financial services.
15Certain other laws not to apply#
(1)A contract of insurance is not capable of being made the subject of relief under:
(a)any other Act; or
(b)a State Act; or
(c)an Act or Ordinance of a Territory.
(2)Relief to which subsection (1) applies means relief in the form of:
(a)the judicial review of a contract on the ground that it is harsh, oppressive, unconscionable, unjust, unfair or inequitable; or
(b)relief for insureds from the consequences in law of making a misrepresentation;
but does not include:
(c)relief in the form of compensatory damages; or
(d)relief relating to the effect of section 12BF (unfair contract terms) of the Australian Securities and Investments Commission Act 2001.
Note: See Subdivision G (enforcement and remedies) of Division 2 of Part 2 of the Australian Securities and Investments Commission Act 2001 for certain remedies relating to the effect of section 12BF of that Act.
Sourced from the Federal Register of Legislation at legislation.gov.au, © Commonwealth of Australia, licensed under CC BY 4.0. Compilations may have been reformatted.