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The Insurance Contracts Act 1984 (ICA) applies to most insurance contracts with an Australian connection and is intended to ensure that a fair balance is struck between the interests of the insurer and the insured. The primary federal laws affecting the industry include: Life Insurance Act 1995 (Life Insurance prudential regulation)
Insurance Contracts Act 1984 (consumer protection in respect of insurance policies) Other legislation which affects the industry includes: A New Tax System (Goods and Services Tax) Act 1999 (taxation rules in respect to insurance e.g. Division 78)
The concept of good faith was established in the insurance industry following the events of Carter v Boehm (1766), and is enshrined in the Insurance Contracts Act 1984 (ICA). [26] The act stipulates, in Section 13, obligations of all parties within a contract to act with utmost good faith.
The Insurance Act 2015 distinguishes between "consumer" and "non-consumer" insurance contracts. Parts 2 and 3 apply only to non-consumer insurance contracts. Part 2 addresses the duty of fair presentation, which is a duty in operation before a contract in entered into.
In addition, section 48 of the Insurance Contracts Act 1984 (Cth) allows third-party beneficiaries to enforce contracts of insurance. Although damages are the usual remedy for the breach of a contract for the benefit of a third party, if damages are inadequate, specific performance may be granted (Beswick v. Beswick [1968] AC 59).
Insurance is characterized as a business vested or affected with the public interest. [2] Thus, the business of insurance, although primarily a matter of private contract, is nevertheless of such concern to the public as a whole that it is subject to governmental regulation to protect the public’s interests.
Uberrima fides is strictly limited in English law to the formation of the insurance contract. [5] During the mid-20th century, American courts expanded it much farther into a post-formation implied covenant of good faith and fair dealing. Violation of that implied covenant came to be seen as a tort, now known as insurance bad faith. [5]
In insurance, the insurance policy is a contract (generally a standard form contract) between the insurer and the policyholder, which determines the claims which the insurer is legally required to pay. In exchange for an initial payment, known as the premium, the insurer promises to pay for loss caused by perils covered under the policy language.