Mr Hayne recommends that the duty of disclosure in the Insurance Contracts Act be changed to a duty on the customer to ‘take reasonable care not to make a misrepresentation’ (Rec 4.5). The recommendation relates only to consumer contracts.
We also consider that this recommendation is an example of where general insurance has been (somewhat superfluously) swept up in an attempt to address the ‘serious questions’ raised by a life insurance case study at the Commission.
The initial reaction of insurance traditionalists was strong – “oh no, there goes two hundred years of common law”. Finity’s assessment is that this reaction is a bit overblown. We expect that changes to the duty of disclosure will have only a minor impact on personal lines of general insurance.
Read more in our Royal Commission Response, or download a printable PDF below.Download