2024 Insurance Law and Regulation Update
Look back at pivotal legal reforms and court decisions in 2024 which have impacted the insurance landscape in Australia.
Yet another year has passed and once again it’s time to reflect on the key legal, regulatory and judicial happenings which have impacted the insurance industry. This article provides a recap of some of the key reforms and rulings within the general insurance sector during 2024.
March 2024
Unfair contract terms protections apply to any insurance policies for consumers and small businesses that were entered into and or renewed from April 2021.
ASIC v Auto & General Insurance Company Limited [2024] FCA 272 was the first court ruling in this space. On 22 March, the Federal Court ruled, as not “unfair”, a notification clause within the Product Disclosure Statement which had required policyholders to disclose changes to their home and contents.
Auto & General could therefore exercise its right to refuse claim payment or reduce a claim if the insured fails to disclose relevant changes. Nonetheless, Auto & General must not exercise this right opportunistically, but only with utmost good faith as a “paramount provision”.
The Federal Court considered that the clause in question, in fact, serves to protect insureds by limiting the insurer’s powers.
May 2024
Section 3.37(1) of the Motor Accident Injuries Act 2017 (NSW) (‘MAIA’) prohibits statutory benefits for injured persons in motor accidents if they have been charged with or convicted of a serious driving offence related to the same accident.
This is unless s 3.37(2) of the MAIA applies whereby the person is acquitted of the offence charged or the proceedings are discontinued.
In the case of Insurance Australia Limited (trading as NRMA) v James Hulse [2024] NSWSC 142, the injured claimant was charged with having prescribed illicit drug(s) whilst driving. The claimant entered a guilty plea for the purposes of s 3.37(1), and whilst the Local Court of NSW found the claimant guilty, it made an order directing the charge to be dismissed under s 10(1)(a) of the Crimes (Sentencing Procedure) Act 1999 (NSW) in light of s 3.37(2).
NRMA denied liability on the basis that the claimant had been charged with or convicted of a serious driving offence, which would terminate statutory benefits. In May 2024, the NSW Supreme Court ruled that an order under s 10(1)(a) of the Crimes (Sentencing Procedure) Act 1999 (NSW) does not remove the existence of a charge. Therefore, s 3.37(2) was not satisfied.
This ruling confirms that an injured person who is charged with a serious driving offence remains disentitled to statutory benefits for loss of income and the costs of medical treatments until he/she is acquitted of the offence, and an order to dismiss the charge is insufficient to restore that entitlement.
June 2024
On 13 June 2024, APRA released Prudential Practice Guide CPG 230 Operational Risk Management to assist implementation of Prudential Standard CPS 230 Operational Risk Management.
As outlined in CPG 230, the aim is to ensure that APRA-regulated entities, including insurers, are resilient to operational risks and disruptions through effective risk management and control, as well as limiting operational disruptions and maintaining critical operations through disruptions.
July 2024
On 11 July 2024, APRA and ASIC finalised the amendments to the Financial Accountability Regime (FAR) Regulator rules. Whilst the FAR currently applies to the banking industry, it will also start to apply to the insurance and superannuation industries from 15 March 2025. The FAR imposes a strengthened responsibility and accountability framework, and aims to improve the risk governance cultures of APRA-regulated entities.
Also in July, amendments to the workers compensation laws in Western Australia started to apply. Key changes impacting employees include:
- doubling the medical and health expenses general limit to 60% of the general limit maximum amount;
- removing declaration requirements for previous workers compensation claims on employment applications; and
- reducing the weekly income compensation rate from 100% to 85% of pre-injury income after 26 weeks.
For insurers, key reforms include entitlement to challenge claims where the main stress resulted from “reasonable employer administration action” and the specification of timelines to accept, decline or defer claims.
August 2024
On 22 August 2024, the National Disability Insurance Scheme Amendment (Getting the NDIS Back on Track No. 1) Bill 2024 (Cth) was passed, commencing 3 October 2024. This clarifies the process to reassess participant status, provide for new framework plans including flexible budgets, and to define NDIS supports.
These changes follow the final NDIS Independent Review Working together to deliver the NDIS report released in December 2023. Further recommendations from the review included a unified system of support from various government agencies such as the Department of Social Services, the Attorney General, the National Cabinet as well as the National Disability Insurance Agency.
September 2024
The Private Health Insurance Legislation Amendment Rules (No. 5) 2024 (Cth) was implemented in September 2024. This increased the daily patient contribution payable by nursing-home-type patients in private hospitals and updated the insurance benefits payable per night for such patients in certain states.
On 20 September 2024, the Federal Court delivered a judgment indicating that it intended to allow defending insurers to “declass” four COVID-19 business interruption class actions. The court noted that the class action process was not the most efficient and effective means of dealing with such claims.
October 2024
A further ruling under the MAIA was made in Allianz Australia Insurance Limited v The Estate of the Late Summer Abawi [2024] NSWSC 1245.
Section 1.6 of the MAIA defines “soft tissue” injuries, which excludes the skin. This was contentious because the skin is medically considered an organ which connects, supports and surrounds other structures of the body. This formed the basis for Allianz’s argument that the Medical Review Panel had misinterpreted s 1.6 in determining lacerations to the claimant’s wrists were not threshold injuries.
The Supreme Court dismissed Allianz’s application for judicial review and held that injury to the skin was not a “soft tissue” injury because it was explicitly excluded from the Parliament list for such injuries. This ruling clarified that claimants with skin injuries are able to pursue ongoing statutory benefits and common law damages, unlike those with threshold injuries.
Separately, trial for the Allianz class action in relation to “add-on” insurance products commenced on 23 October 2024 in the Supreme Court of Victoria. These products included loan protection, motor equity, extended motor warranty, and tyre and rim insurance at the time of purchasing a car or motorcycle. Class action members alleged that Allianz and Allianz Life had engaged in misleading and deceptive conduct and unconscionable conduct, breaching the Australian Securities and Investments Commission Act 2001 (Cth) and Corporations Act 2001 (Cth).
Prior to trial, the parties have proposed to settle for $170m, inclusive of costs, without admission of liability. The Supreme Court of Victoria will decide whether to approve the settlement on 11 March 2025.
November 2024
Child sexual abuse liability claims remain an area of high uncertainty for insurers.
On 13 November 2024, the High Court unanimously ruled in Bird v DP (a pseudonym) [2024] HCA 41 that no vicarious liability could exist in the absence of an employer/employee relationship between institutions and its members.
In this case, DP alleged that a Catholic priest had assaulted and sexually abused him on “pastoral visits” in the 1970s, and sued the Catholic Bishop representing the Ballarat Diocese. The Victorian Supreme Court found that the Diocese was vicariously liable for the abuse despite there being no typical employment or agency relationship with parish priests.
This was overturned by the High Court.
It is envisaged that, following this ruling, a position conferring intimacy and trust, and the opportunity and occasion to offend alone, are insufficient to attach vicarious liability to institutions. A true relationship of employment or agency must be proved. The precedent set by this decision could reduce the liabilities that the insurers of these institutions owe for abuse and liability claims going forth.
To recap
This recap includes legal, regulatory and judicial happenings that I believe have impacted, or have potential to impact, the insurance landscape in Australia. It does not represent a comprehensive list of all activities in 2024.
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