Australian insurance law

Law governing contracts for insurance between individuals and companies in Australia

Australian insurance law is based on commercial contract law, but is subject to regulations that affect the insurance industry and insurance contracts within Australia. Commonwealth Parliament 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. 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 all of which forms the body of insurance law.

The prudential aspects of general, life and health insurance (solvency etc.) are regulated by the Australian Prudential Regulation Authority (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 (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 (ACCC) also has a regulatory role with respect to competition law. In certain states, various bodies also have powers in regulating certain types of statutory insurance. For example, in New South Wales the Motor Accidents Authority regulates Compulsory Third Party motor liability insurance. In many cases these bodies have powers regarding premium rating and reinsurance rules.

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."

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).

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