Section 29(3) of the Insurance Contracts Act should be amended so that an insurer may only avoid a contract of life insurance on the basis of non‑disclosure or misrepresentation if it can show that it would not have entered into a contract on any terms.
Government Response
The Government agrees to amend the Insurance Contracts Act 1984 to ensure that insurers only avoid a contract of life insurance on the basis of non‑disclosure or misrepresentation if it can show that it would not have entered into a contract on any terms.
Consistent with the Government’s response to Recommendation 4.5 above, while appropriate disclosure is important to ensure that insurers are able to appropriately price the risks being underwritten, it is essential that appropriate safeguards are in place to avoid consumers having their claims declined where they may have failed to disclose a matter that would not have had any real bearing on the likelihood of them being offered insurance or the price of the insurance.