Financial Sector Reform (Hayne Royal Commission Response) Act 2020 (135 of 2020)

Schedule 2   Insurer avoidance of life insurance contracts, and duty to take reasonable care not to make a misrepresentation

Part 2   Duty to take reasonable care not to make a misrepresentation

Insurance Contracts Act 1984

15   Before section 27A

Insert:

27AA Meaning of relevant failure

(1) In this Act, a relevant failure in relation to a contract of insurance is:

(a) if the contract is, or would be, a consumer insurance contract - a misrepresentation made by the insured in breach of the duty to take reasonable care not to make a misrepresentation; or

(b) otherwise:

(i) a failure by the insured to comply with the duty of disclosure; or

(ii) a misrepresentation made by the insured to the insurer before the contract was entered into.

(2) Without limiting subsection (1), if, in relation to a contract of life insurance under which a person other than the insured would become a life insured:

(a) the life insured made a misrepresentation during the negotiations for the contract but before it was entered into; and

(b) the misrepresentation would have been a breach of the duty to take reasonable care not to make a misrepresentation if that duty had applied to the life insured in relation to the contract;

then the misrepresentation is a relevant failure in relation to the contract (whether or not the contract is a consumer insurance contract).