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| Consumers are calling for the wording on insurance policies to be made clearer. |
CONSUMERS will get new powers to challenge insurance companies following the industry's poor response to the 2011 Queensland floods.
The Gillard Government has promised to let customers challenge unfair terms in their insurance contracts, as is the case when dealing with other industries such as mobile phone providers and mortgage companies.
Once the legislation is changed, insurers will no longer be able to hide behind fine print in contracts.
After tough lobbying by the insurance industry, insurance contracts were exempted when the Australian Consumer Law was enacted on January 1, 2011 - just days before southeast Queensland flooded.
But the Government has backtracked in response to the fallout over flood policies.
The Insurance Law Service, which provides free advice to consumers, has backed the changes.
"Floods, bushfires, whatever it is, every time there's a mass claim this is going to be a possible tool to get justice for consumers," the service's principal solicitor Kat Lane said.
"We're ecstatic about it. It's really important legislation.
"It gives an incentive for the industry to have a good look at their contracts to make sure they haven't got unfair terms in them."
Introducing the amendment, Assistant Treasurer David Bradbury said the changes would allow consumers to challenge unfair insurance terms in the courts.
Prime Minister Julia Gillard described insurance companies as "cowardly" in 2011 for refusing to front public meetings of flood victims in Ipswich. "It's an awful thing to need a disaster to get this, but we want the industry to really have a good look at themselves," she said.
Peak body Insurance Council Australia said yesterday consumers already enjoyed strong protection from unfair terms in insurance contracts, and further legislation was unnecessary.
The Government plans to introduce the amendment to the consumer laws in Parliament this year.
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11.1.13
