Insurance Law Reform Act 1977

1: Short Title
This Act may be cited as the Insurance Law Reform Act 1977.
2: Interpretation
In this Act, unless the context otherwise requires,— company section 41 continuous disability insurance contract life policy Life Insurance Act 1945–1973 s 4(1) (Aust)
3: Act to bind the Crown
This Act shall bind the Crown.
4: Misstatements in contracts of life insurance
1: A life policy shall not be avoided by reason only of any statement (other than a statement as to the age of the life insured) made in any proposal or other document on the faith of which the policy was issued, reinstated, or renewed by the company unless the statement—
a: was substantially incorrect; and
b: was material; and
c: was made either—
i: fraudulently; or
ii: within the period of 3 years immediately preceding the date on which the policy is sought to be avoided or the date of the death of the life insured, whichever is the earlier.
2: For the purposes of subparagraph (i) of paragraph (c) of subsection (1), a statement is made fraudulently if the person making it makes it—
a: knowing it is incorrect; or
b: without belief in its correctness; or
c: recklessly, without caring whether it is correct or not. Life Insurance Act 1945–1973 ss 4(1), 84 (Aust)
5: Misstatements in other contracts of insurance
1: A contract of insurance shall not be avoided by reason only of any statement made in any proposal or other document on the faith of which the contract was entered into, reinstated, or renewed by the insurer unless the statement—
a: was substantially incorrect; and
b: was material.
2: Nothing in this section shall—
a: apply in respect of any contract of insurance embodied in a life policy; or
b: limit the provisions of sections 4 7 Instruments Act 1958 s 25 (Vic)
6: Incorrectness and materiality defined
1: For the purposes of sections 4 5
2: For the purposes of sections 4 5 1908 No 112 s 20(2), (4)
7: Misstatement of age
1: A life policy is not avoided by reason only of a misstatement of the age of the life insured.
2: Where the true age as shown by the proofs is greater than that on which the policy was based, the company may vary the sum insured by, and the bonuses (if any) allotted to, the policy so that, as varied, they bear the same proportion to the sum insured by, and the bonuses (if any) allotted to, the policy before variation as the amount of the premiums that have become payable under the policy as issued bears to the amount of the premiums that would have become payable if the policy had been based on the true age.
3: Where the true age as shown by the proofs is less than that on which the policy was based, the company shall either—
a: vary the sum insured by, and the bonuses (if any) allotted to, the policy so that, as varied, they bear the same proportion to the sum insured by, and the bonuses (if any) allotted to, the policy before variation as the amount of the premiums that have become payable under the policy as issued bears to the amount of the premiums that would have become payable if the policy had been based on the true age; or
b: reduce, as from the date of issue of the policy, the premium payable to the amount that would have been payable if the policy had been based on the true age and repay to the policy owner the amount of overpayments of premium less any amount that has been paid as the cash value of bonuses in excess of the cash value that would have been paid if the policy had been based on the true age. Life Insurance Act 1945–1973 s 83 (Aust)
8: Arbitration clauses not binding
1: Subject to subsection (2), a provision of a contract of insurance entered into by an insured otherwise than in trade
a: requiring differences or disputes arising out of or in relation to the contract to be referred to arbitration; or
b: providing that no action or suit shall be maintainable upon the contract or against the insurer in respect of any claim under or difference or dispute arising out of or in relation to the contract unless the issue, claim, difference, or dispute has first been referred to arbitration or an award in arbitration proceedings has been first obtained; or
c: providing that arbitration or an award in arbitration proceedings is a condition precedent to any right of action or suit upon or in relation to the contract; or
d: imposing by reference to arbitration or to an award in arbitration proceedings any limitation on the right of any person to bring or maintain an action or suit upon or in relation to the contract,— shall not bind the insured.
2: An agreement made by the parties to a contract of insurance entered into by an insured otherwise than in trade Insurance Amendment Act 1968 s 7 (Qld) Section 8(1) amended 1 July 1997 section 17 Arbitration Act 1996 Section 8(2) amended 1 July 1997 section 17 Arbitration Act 1996
9: Time limits on claims under contracts of insurance
1: A provision of a contract of insurance prescribing any manner in which or any limit of time within which notice of any claim by the insured under such contract must be given or prescribing any limit of time within which any suit or action by the insured must be brought shall—
a: if that contract of insurance is embodied in a life policy and the claim, suit, or action relates to the death of the insured, not bind the insured; and
b: in any other case, bind the insured only if in the opinion of the arbitrator or court determining the claim the insurer has in the particular circumstances been so prejudiced by the failure of the insured to comply with such provision that it would be inequitable if such provision were not to bind the insured.
2: Where—
a: the insured under any contract of insurance to which subsection (1)﻿(b) applies fails to give notice of any claim in any manner or within any limit of time prescribed by the contract; and
b: the cost of repairing, replacing, or reinstating any property when it fails to be met is greater than that which would have applied if the notice had been given in the manner or within the time so prescribed,— that greater cost shall not constitute prejudice to the insurer for the purposes of subsection (1)﻿(b), but the insurer shall not be obliged to apply or pay in repairing, replacing, or reinstating the property a greater sum than that for which he would have been liable if the notice of claim had been given in the manner or within the time so prescribed. Instruments Act 1958 s 27 (Vic)
10: Salesman, etc, to be agents of insurer
1: A representative of the insurer who acts for the insurer during the negotiation of any contract of insurance, and so acts within the scope of his actual or apparent authority, shall be deemed, as between the insured and the insurer and at all times during the negotiations until the contract comes into being, to be the agent of the insurer.
2: An insurer shall be deemed to have notice of all matters material to a contract of insurance known to a representative of the insurer concerned in the negotiation of the contract before the proposal of the insured is accepted by the insurer.
3: In this section the term representative of the insurer
11: Certain exclusions forbidden
Where—
a: by the provisions of a contract of insurance the circumstances in which the insurer is bound to indemnify the insured against loss are so defined as to exclude or limit the liability of the insurer to indemnify the insured on the happening of certain events or on the existence of certain circumstances; and
b: in the view of the court or arbitrator determining the claim of the insured the liability of the insurer has been so defined because the happening of such events or the existence of such circumstances was in the view of the insurer likely to increase the risk of such loss occurring,— the insured shall not be disentitled to be indemnified by the insurer by reason only of such provisions of the contract of insurance if the insured proves on the balance of probability that the loss in respect of which the insured seeks to be indemnified was not caused or contributed to by the happening of such events or the existence of such circumstances.
12: Actions on or in relation to contracts of insurance to be tried before a Judge alone
1: Notwithstanding anything in section 2 or section 3 of the Judicature Amendment Act (No 2) 1955 High Court
2: The service of a third-party notice making an insurer a party to an action shall not affect the manner in which the issues between the plaintiff and the defendant are to be tried but any insurer who is so made a party to an action may, if he agrees to be bound by the issues arising between the plaintiff and the defendant, require the issues arising between the insurer and the party who served the third-party notice to be determined by a Judge without a jury if the insurer, within the time limited for filing his statement of defence, files a notice to that effect in the court and serves copies of it on the other parties to the action. Section 12(1) amended 1 April 1980 section 12 Judicature Amendment Act 1979
12A: Application for shares in company not to be contained in proposal for insurance
1: A form of proposal for insurance that contains or purports to be an application for shares in a company must not be issued by or on behalf of the company.
2: If any person makes a proposal for insurance to a company, the company must not allot shares to that person without first receiving an application for shares that is contained in a document separate from the proposal for insurance.
3: If a company contravenes this section,—
a: the company commits an offence and is liable on
b: every director of the company commits an offence and is liable on
i: that the act that constituted the offence under paragraph (a) took place with his or her authority, permission, or consent; or
ii: that he or she—
A: knew, or could reasonably be expected to have known, that the offence under paragraph (a) was to be or was being committed; and
B: failed to take reasonable steps to prevent or stop it.
4: Nothing in this section affects the validity of a policy of insurance or of an allotment of shares of a company.
5: In this section, company section 2 1994 No 117 s 33 Section 12A inserted 1 February 2011 section 241(2) Insurance (Prudential Supervision) Act 2010 Section 12A(3)﻿(a) amended 1 July 2013 section 413 Criminal Procedure Act 2011 Section 12A(3)﻿(b) amended 1 July 2013 section 413 Criminal Procedure Act 2011
13: Application of Act
1: This Act shall apply in relation to life policies whether issued, reinstated, or renewed before or after the commencement of this Act: provided that nothing in this subsection shall affect—
a: the rights of any claimant under a life policy if the event giving rise to the claim occurred before the commencement of this Act; or
b: the rights of the parties under any judgment given in any court before the commencement of this Act, or under any judgment given on any appeal from any such judgment, whether the appeal is commenced before or after the commencement of this Act; or
c: the rights of the parties to any award made—
i: before the commencement of this Act following the reference of any matter to arbitration; or
ii: after the commencement of this Act following the setting aside of an award made before the commencement of this Act; or
d: in the case of an award to which paragraph (c) applies, the rights of the parties to any proceedings by way of appeal against the making of any such award or for the setting aside of any such award.
2: This Act shall apply in relation to contracts of insurance (other than life policies) entered into, reinstated, or renewed after the commencement of this Act.
14: Marine Insurance Act 1908 to be subject to this Act
Nothing in the Marine Insurance Act 1908
15: No contracting out
The provisions of this Act shall have effect notwithstanding any provision to the contrary in any agreement or in any contract of insurance (whether embodied in a policy or not).
16: Repeal
Amendment(s) incorporated in the Act(s)