Australian insurance law is based on commercial

contract law A contract is a legally enforceable agreement between two or more parties that creates, defines, and governs mutual rights and obligations between them. A contract typically involves the transfer of goods, services, money, or a promise to tran ...

, but is subject to regulations that affect the

insurance Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to hedge ...

industry and

contracts A contract is a legally enforceable agreement between two or more parties that creates, defines, and governs mutual rights and obligations between them. A contract typically involves the transfer of goods, services, money, or a promise to tran ...

within

Australia Australia, officially the Commonwealth of Australia, is a Sovereign state, sovereign country comprising the mainland of the Australia (continent), Australian continent, the island of Tasmania, and numerous List of islands of Australia, sma ...

Commonwealth Parliament The Parliament of Australia (officially the Federal Parliament, also called the Commonwealth Parliament) is the legislative branch of the government of Australia. It consists of three elements: the monarch (represented by the governor-g ...

has power to make laws with respect to insurance and insurance companies under section 51(xiv) (insurance other than state insurance) and (xx) (the corporations power) of the

Australian Constitution The Constitution of Australia (or Australian Constitution) is a constitutional document that is supreme law in Australia. It establishes Australia as a federation under a constitutional monarchy and outlines the structure and powers of the ...

. Generally, the ''Insurance Act 1973'' and ''Insurance Contracts Act 1984'' are the main acts that apply, however there are a number of other pieces of legislation enacted by the states, private codes and voluminous

case law Case law, also used interchangeably with common law, is law that is based on precedents, that is the judicial decisions from previous cases, rather than law based on constitutions, statutes, or regulations. Case law uses the detailed facts of a l ...

all of which forms the body of insurance law.

Legislation

The ''Insurance Act 1973'' (Cth) sets minimum capital and solvency requirements for companies wanting to enter or operate in the insurance market. Chapter 7 of the ''Corporations Act 2001'' (Cth) regulates the way in which insurers and insurance agents and brokers carry on business and how they deal with the people they do business with and intend to do business with. The ''Insurance Contracts Act 1984'' (ICA) applies to most insurance contracts with an Australian connection and is intended to ensure that a fair balance is struck between the interests of the insurer and the insured. The primary federal laws affecting the industry include: * ''

Life Insurance Act 1995 Life is a quality that distinguishes matter that has biological processes, such as signaling and self-sustaining processes, from that which does not, and is defined by the capacity for growth, reaction to stimuli, metabolism, energy tran ...

'' (Life Insurance prudential regulation) * '' Insurance Act 1973'' (General Insurance prudential regulation) * '' Health Insurance Act 2007'' (Health insurance prudential regulation and

consumer protection Consumer protection is the practice of safeguarding buyers of goods and services, and the public, against unfair practices in the marketplace. Consumer protection measures are often established by law. Such laws are intended to prevent business ...

) * ''

Corporations Act 2001 The ''Corporations Act 2001'' (Cth) is an Act of the Parliament of Australia, which sets out the laws dealing with business entities in the Commonwealth of Australia. The company is the Act's primary focus, but other entities, such as partners ...

'' (especially Ch 7, consumer protection in respect of insurance policies) * ''

Insurance Contracts Act 1984 Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to hedge ...

'' (consumer protection in respect of insurance policies) Other legislation which affects the industry includes: * A New Tax System (Goods and Services Tax) Act 1999 (Taxation rules in respect to insurance e.g. Division 78) * Privacy Act 1988 (The National Privacy Principles) Further regulations include: * The General Insurance Code of Practice which all general insurer signatories agree to self-regulate under. *

Payment Card Industry Data Security Standard The Payment Card Industry Data Security Standard (PCI DSS) is an information security standard used to handle credit cards from major card brands. The standard is administered by the Payment Card Industry Security Standards Council and its use i ...

(PCI DSS)

Regulators

The prudential aspects of general, life and health insurance (solvency etc.) are regulated by the

Australian Prudential Regulation Authority The Australian Prudential Regulation Authority (APRA) is a statutory authority of the Australian Government and the prudential regulator of the Australian financial services industry. APRA was established on 1 July 1998 in response to the recomm ...

(APRA), which has the power under the ''Insurance Act 1973'' to investigate a general insurer, freeze its assets or direct it to take specific action (for example, stop writing new business). The

Australian Securities & Investments Commission The Australian Securities and Investments Commission (ASIC) is an independent commission of the Australian Government tasked as the national corporate regulator. ASIC's role is to regulate company and financial services and enforce laws to pro ...

(ASIC) is responsible for the general administration of the ''Insurance Contracts Act 1984''. Matters relating to advice or disclosure of insurance products sold are regulated by ASIC. The

Australian Competition & Consumer Commission The Australian Competition and Consumer Commission (ACCC) is the chief competition regulator of the Government of Australia, located within the Department of the Treasury. It was established in 1995 with the amalgamation of the Australian Tra ...

(ACCC) also has a regulatory role with respect to

competition law Competition law is the field of law that promotes or seeks to maintain market competition by regulating anti-competitive conduct by companies. Competition law is implemented through public and private enforcement. It is also known as antitrust l ...

. In certain states, various bodies also have powers in regulating certain types of statutory insurance. For example, in

New South Wales ) , nickname = , image_map = New South Wales in Australia.svg , map_caption = Location of New South Wales in AustraliaCoordinates: , subdivision_type = Country , subdivision_name = Australia , established_title = Before federation , es ...

the Motor Accidents Authority regulates Compulsory Third Party motor liability insurance. In many cases these bodies have powers regarding premium rating and reinsurance rules.

Insurance contract

The formation of an insurance contract is governed by ordinary contractual principles however, as a commercial contract, a policy of insurance should be given a businesslike interpretation "having regard to the language used by the parties, the commercial circumstances the document addresses, and the objects which it is intended to secure."

Code of Practice

The General Insurance Code of Practice is a self-regulatory code that binds all general insurers who are signatories to it. It has been approved by ASIC pursuant to s 1101A of the Corporations Act 2001 (Cth).According to ''ASIC Regulatory Guide 183'', ASIC's approval does no more than inform consumers that they can have confidence in the Code of Practice.

Australian Financial Complaints Authority

If a person doesn't agree with the outcome of the insurer's Internal Dispute Resolution (IDR) process, they can contact the

Australian Financial Complaints Authority The Australian Financial Complaints Authority or AFCA is an external dispute resolution (EDR) scheme for consumers who are unable to resolve complaints with member financial services organisations. It is operated as a not-for-profit company limite ...

(AFCA) with a request that the Service resolve the dispute.

References

External links

Insurance Contracts Act 1984

Australian Prudential Regulatory Authority

Australian Securities and Investment Commission

Australian Insurance Law Association

Insurance Council of Australia

Insurance Ombudsman Service (IOS)