Implementing a standard flood definition and Key Facts Sheet (not another version of the long awaited reform of the Act!)

On 5 April 2011, the Government released a consultation paper entitled 'Reforming flood insurance: Clearing the waters' suggesting a number of proposed improvements to the regulatory framework and other aspects of Australia's insurance market. As explained in our previous flood updates (click here and here to view), the paper contained two key proposals, namely, a standard definition of flood and the Key Facts Sheet (KFS) to outline the key information in relation to home building and home contents policies.

On 14 November 2011 Treasury announced the introduction of the legislative framework for the standard definition of flood and the KFS and this week released the Insurance Contracts Amendment Bill 2011 (the Bill) which implements these proposals.

The amendments in the Bill will take effect from the date of Royal Assent. However, the regulations in relation to the measures in the Bill will only commence two years after the day the regulations are made in respect of each of the measures.

The Explanatory Memorandum to the Bill explains that:

...these measures will enable consumers to make better informed decisions about the purchase of insurance contracts; and will reduce the current level of consumer confusion regarding what is and is not included in their insurance contracts, in particular, the extent to which contracts provide cover for flood and what cover for flood means.

It is also worthy to note that despite any clarity provided by a standard definition, introductory words may become all important in either limiting or expanding the scope of cover.

The full Bill can be reviewed here.

For more information, please contact:

Sydney



Ray Giblett

t (02) 9931 4833

e rgiblett@nsw.gadens.com.au

Wendy Blacker

t (02) 9931 4922

e wblacker@nsw.gadens.com.au

Brisbane



David Slatyer

t (07) 3231 1532

e dslatyer@qld.gadens.com.au

This report does not comprise legal advice and neither Gadens Lawyers nor the authors accept any responsibility for it.