The Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen MP, has released an options paper relating to unfair terms included in insurance contracts.

The paper discusses the nature and scope of the problem, the adequacy of existing regulation and identifying and assess options to remedy the problem.

The options include extending the generic provisions of the Australian Consumer Law, and making other reforms to the Insurance Contracts Act 1984.

In its 2009 inquiry by the Senate Economics and Legislation Committee into the Australian Consumer Law Bill (passed today), one issue that was considered was that section 15 of the Insurance Contracts Act 1984 (IC Act) would operate to prevent some or all of the unfair terms provisions proposed to be inserted in the ASIC Act (which mirror those in the ACL in respect of financial services) applying to terms in insurance contracts.

The paper examines the current carve-out under section 15 of the Insurance Contracts Act for insurance contracts from the operation of the unfair contracts terms provisions of the ASIC Act.

The closing date for submissions is 30 April 2010.

The Government has also introduced the Insurance Contracts Amendment Bill 2010 into the House of Representatives.