Urgent Notice to Insurers - Immediate Amendments to Disclosure Notices

 
Insurers need to be made aware of immediate changes to the Disclosure Notices required for all ‘eligible contracts of insurance’ (regulation 2B) being - motor, home building, home contents, sickness and accident, consumer credit and travel insurance.

The amendments to the Insurance Contracts Regulations 1985 (the regulations) on 16 April 2015, introduced new Duty of Disclosure Notices required for eligible contracts of insurance under s. 22 of the Insurance Contracts Act 1984 (the Act).

These amendments commence in two stages:

• Immediately, being from 17 April 2015; and
• Amendments commencing 28 December 2015

These amendments also affect contracts of insurance which an insurer has opted into providing disclosure notices (s.21A).

Don't Panic - A Transitional Period Applies

Despite the repeal of existing Disclosure Notices, until 28 December 2015, insurers may use either the current notices or the new notices.

After 28 December 2015, new notices will be required to be used.

New Ability to Opt Out (for those opted in contracts)

In those contracts where an insurer has opted into the Disclosure Notice requirements (s.21A), there will now be a mechanism for insurers to opt out of the eligible contract requirements.

To opt out, an insurer is required to serve a notice to clearly indicate that the contract of insurance is no longer an eligible contract of insurance (s.22).

Strict time frames apply as follows:

• An insurer gives notice to opt in before 28 December 2015;
• The contract is subsequently renewed before 28 December 2016; and
• Before that renewal, an insurer gives the notice pursuant to s. 22, which clearly indicates the contract is no longer an eligible contract of insurance.

New Disclosure Notices

A. From 17 April 2015, there will be new disclosure notices available to be used for:

• Contracts of general insurance (other than eligible contracts)
• Contracts of life insurance
• Eligible contracts of insurance

With the addition of a new Disclosure Notice:

• Renewal of eligible contracts of insurance

However, the transitional period will apply and although these notices can be used from 17 April 2015, they are not required until 28 December 2015.

B. From 28 December 2015, new Disclosure Notices will come into effect for:

• Contracts of general insurance (other than eligible contracts)
• Contracts of life insurance
• Eligible contracts of insurance
• Renewal of eligible contracts of insurance

A further Disclosure Notice will come into effect, to inform another person who may become a life insured. Specifically, the written disclosure informing persons to be insured by others.

Duty of Disclosure - Reminder Notices

From 28 December 2015, insurers will have the additional requirement to serve Disclosure Notices for reminder notices.

The Notice ‘Writing to remind of duty of disclosure’ is divided into 3 parts:

• Contracts of general insurance (other than eligible contracts)
• Contracts of life insurance
• Eligible contracts of insurance

Duty of Disclosure - Oral Notices

New Oral Notices will commence from 28 December 2015 for the original entering into of an eligible contract of insurance, in compliance with s.22(1) of the Act.

Urgent Review

Although the transitional period does apply – don’t wait, make a plan now.

All insurers should immediately review and plan a schedule of when they will introduce the new notices to ensure compliance by no later than 28 December 2015.