REFORMING INSURANCE LAW: - Law Commission

2.3 These reforms aside, the Australian legislation has been subject to a good deal of
consideration. In January 2000 the Attorney General asked the Australian Law Reform
Commission to investigate the operation of the Marine Insurance Act 1909 and to consider:
whether any part of it restricted competition; the desirability of having a regime consistent with
international practice in the marine insurance industry and whether any change might result in a
competitive disadvantage for the Australian insurance industry; the effects on the environment,
welfare and equity, occupational health and safety, economic and regional development,
consumer interest, the competitiveness of business, including small business and efficient
resource allocation; and compliance costs on small business. The ALRC was also asked to:
identify the nature and magnitude of the social, environmental or economic problems that the
Act sought to address; clarify the objectives of the Act; assess alternatives, including nonlegislative
alternatives to the Act; and analyse and quantify the benefits, costs and overall effects
of the Act and any proposed alternatives to it. The ALRC duly reported in February 2001 22 and
identified a whole series of changes, although the ALRC was clearly constrained by the
considerations that the primary market for marine insurance was elsewhere 23 so that a complete
rewrite of the legislation would create confusion, possibly make Australian risks more difficult to
place in international markets and that the primary focus of the Insurance Contracts Act 1984
was consumer insurance. Accordingly, and primarily, in the interests of continuity, the ALRC
recommended that the 1909 Act be retained, but in a reformed state. 24
2.4 As far as non-marine insurance is concerned, in September 2003 the Australian Treasury
instituted a review of the Insurance Contracts Act 1984. The purpose of the review was to
determine whether the Act was in any way ambiguous and whether the rights and obligations
under the Act continued to be appropriate in the light of product, regulatory and judicial
developments. The Treasury’s starting point was that the Act had worked well and that, at most,
minor modifications might be required. The Treasury Review was conducted by Alan Cameron
and Nancy Milne. In October 2003 they produced a report on section 54, a provision which has
given rise to particular problems in respect of “claims made and notified” liability policies
(“Treasury Review I”), and in June 2004 they produced a report on the Act’s provisions other
than section 54 (“Treasury Review II”). The Panel agreed with the assumption in the terms of
reference that the Act had for the most part been a success, and although a large number of
recommendations for changes were put forward these were for the most part relatively minor.
The underlying policy of the legislation was not under challenge. Much of Treasury Review II is
concerned with regulatory rather than contractual matters, including the promulgation and
enforcement of codes of practice. The recommendations of the two Treasury Reviews have been
accepted by the Australian Government, and in February 2007 five consultative documents were
published, consisting of draft amendments to the Insurance Contracts Act 1984 in the form of an
Insurance Contracts Amendment Bill 2007, amendments to the Regulations made under the 1984
Act and accompanying explanatory documents to both sets of amendments. This material is
22
ALRC 91.
23
And primarily in the UK: ALRC 91, paras 3.41-3.46. Chapter 7 reviews the history of the adoption of the Marine
Insurance Act 1906 in other jurisdictions.
24
ALRC 91, Chapter 3.
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