Amendment paper Bill enacted Released 16 September 2024 | Arena Williams

Contracts of Insurance Bill - Amendment paper No 110

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Contents

(a)

65A Interest on claims

Explanatory note

No 110

House of Representatives

Amendment Paper

Contracts of Insurance Bill

Proposed amendments

Arena Williams, in Committee, to move the following amendments:

Clause 63

Replace clause 63(5) (page 29, lines 18 and 19) with:

(5)

The utmost good faith rule—

(a)

means the rule of law to the effect that a contract of insurance is a contract based on the utmost good faith; and

(b)

includes a duty on an insurer to accept (or reject), assess, and settle a claim within a reasonable period of time.

New clause 65A

After clause 65 (page 30, after line 8), insert:

65A Interest on claims

(1)

If an insurer is liable to pay to a person (A) an amount under a contract of insurance or under this Act in relation to a contract of insurance the insurer must pay interest on the amount to which A is entitled in accordance with this section.

(2)

Interest is payable in respect of the period—

(a)

commencing on the day on which it becomes unreasonable for the insurer to withhold payment; and

(b)

ending on the day on which payment is made.

(3)

For the purposes of subsection (2)(a), it becomes unreasonable for the insurer to withhold payment on the day that is 12 months after the date on which the claim was made; unless, in the circumstances, it is reasonable for the insurer to withhold payment until a later date.

(4)

Interest must be calculated in accordance with Schedule 2 of the Interest on Money Claims Act 2016.

(5)

This section has effect despite any provision to the contrary in any legislation, rule of law, contract of insurance, deed, or other instrument.

Explanatory note

This Amendment Paper amends the Contracts of Insurance Bill to require insurers to deal with insurance claims in a timely manner and to create a new penalty interest for insurers who fail to pay policyholders within a reasonable period of time.

Contracts of Insurance Bill - Amendment paper No 110