ASIC has appealed the Federal Court’s decision to dismiss ASIC’s proceedings against Auto & General Insurance Company Limited (Auto & General) regarding an alleged unfair contract term under the ASIC Act.
ASIC alleged that a term in Auto & General house and contents insurance policies:
- required policyholders to notify Auto & General if ‘anything’ changes about their home and contents; and
- stated that if policyholders did not provide the notifications, then Auto & General may reduce or refuse to pay claims, or may cancel or not offer to renew their contracts,
ASIC alleged that the term is an unfair contract term under the ASIC Act.
The Federal Court disagreed and dismissed ASIC’s proceeding on 22 March 2024.
ASIC has appealed the decision of the Federal Court. ASIC remains concerned that the term:
- imposes an unclear obligation on policyholders regarding what they need to disclose to Auto & General;
- suggests that Auto & General has a broader right to refuse claims or reduce the amount payable under claims if the policyholder does not meet the notification obligation than is otherwise available to Auto & General under the Insurance Contracts Act; and
- could mislead or confuse the policyholder as to their true obligations and rights under the contract.
The appeal will be heard by the Full Federal Court on a date to be determined.
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Background
On 4 April 2023, ASIC commenced proceedings against Auto & General in the Federal Court (23-088MR). The alleged unfair contract term appeared in the following product disclosure statements issued by Auto & General:
- Auto & General Home and Contents Insurance Policy PDS
- Budget Direct Your Home & Contents Insurance Policy PDS
- Australia Post Your Home & Contents Insurance Policy PDS
- ING Home & Contents Insurance Policy PDS
- Catch Insurance Your Home & Contents Insurance Policy PDS
- Virgin Insurance Your Home & Contents Insurance Policy PDS
- Qantas Home and Contents Insurance Policy PDS.
The Auto & General Home and Contents Insurance Policy PDS applies to 1st For Women, Best Buy, Maxxia, Ozicare and Retirease branded home and contents insurance policies issued by Auto & General.
Auto & General no longer issues new home and contents policies for the Australia Post, Catch Insurance and Maxxia brands.
On 4 May 2023, Auto & General issued Supplementary Product Disclosure Statements (SPDS) for its home and contents insurance products that, among other things, replaced the term that was the subject of these proceedings.
On 21 September 2023, Auto & General issued new Product Disclosure Statements for its home and contents insurance products that contained the SPDS replacement term.
Editor's Note:
On 31 May 2024, the Court listed the appeal for a one day hearing on 28 August 2024.
Editor's Note 2:
The appeal was heard before the Full Federal Court on 28 August 2024 and the decision is reserved.