Contracts of Insurance Bill

Members, the House is in committee for further consideration of the Contracts of Insurance Bill. When we were last debating this bill, we were debating Part 1. This is the debate on clauses 3 to 9, “Preliminary provisions” and Schedule 1. Once again, the question is that Part 1 stand part.

Thank you, Mr Chair. It’s really good to be here, working late again. It’s really good to be here doing the mahi well into the night on this important bill.

I realise we’ve talked a little bit about Part 1 as well, but we’ve got a few more things to tidy up. One is just around the interpretation clause. One is, really, a drafting question, because it really frustrates me—and I will come to some other drafting points, particularly in respect of average later on, where nobody knows what the words mean. Why we still use words that really have their foundation in the 1700s, I don’t know. If you look at the word “avoid”—which in itself is kind of not a natural English way to say that a contract is terminated from the beginning—that definition says, “in relation to a contract of insurance, means to avoid from its inception”. We had parliamentary counsel in the Justice Committee recently and we talked about the use of plain language, and I’d imagine counsel’s not far away. Why would we need to use the words “from its inception” instead of “from the beginning”? That’s just a plain English question. My suggestion is that we get rid of these arcane and archaic terms and just use genuine everyday English language. That’s the first thing. That’s drafting. I mean, if we don’t get that one right, it’s not the end of the world; we’ve still got a meaning.

The second point, though, is around health insurance. “Health insurance” is defined quite unusually because it’s defined as meaning “insurance against a liability to pay fees or charges relating to the provision of a health service (within the meaning of section 5(1) of the Health Practitioners Competence Assurance Act 2003)”, but that’s not how health insurance works. Whilst liability insurance works that way—if you get sued, your insurer pays your liability—health insurance is, in fact, forward-looking. If we think of some of the funding promises this Government has made but not kept around—for example, cancer treatments—people aren’t liable for their cancer treatment. They want to get cancer treatment; they want to purchase the drugs and be reimbursed for them. They’re not liable to anyone. It’s not a liability policy; it’s an insurance for a future event. I’m actually quite concerned that that’s a real dog’s breakfast in the definition, because there is no health liability. When you are looking to get your hip replaced, or drugs for cancer treatment, you’re not incurring a liability at all, and it’s totally got the thing on its head; when, in fact, what you’re wanting is a promise to pay for a debt that’s incurred in the future. I think that one really needs to be tidied up.

There’s another one. This one’s actually quite important because it pervades the entire bill, and that’s “policyholder”. This one crops up time and again, where the bill uses the term “policyholder”. What it doesn’t recognise is that any particular policy can have more than one policyholder. Not only can it have more than one policyholder, they can hold it in different capacities. They could hold it severally. They could, for example, have a life policy over a partner in their law firm but hold it in different shares. One person might have a tenth of it; someone else might have two-tenths of it, and so on. That would be a policy held in common but severally. The ones that create real problems are joint policies where there are, perhaps, a husband and wife, or domestic partners, who insure a house, and their rights are joint in the sense that they’re identical and as if they were one. The real question here—and it crops up and it is really important—is that if one of the parties tells a fib, how does it affect the rights of the other party? In respect of “policyholder”, the definition just blindly sails past this really important distinction.

If we look at “policyholder”, it means “the person who has entered into a contract of insurance with”; it doesn’t say “the people who have entered into a contract of insurance”. It doesn’t even recognise the fact that there might be one policy—[Bell rung]

Dr Duncan Webb.

💬 Hon Andrew Bayly: Mr Chair?

CHAIRPERSON (Greg O’Connor): I’ll let him finish.

💬 Hon Dr DUNCAN WEBB: I’ll accept that indulgence, Mr Chair, and I’ll just finish off. My point was simply to conclude that, for the person who has entered into the contract of insurance, we need to make sure that the definition effectively captures different kinds of policies held by multiple policyholders. When we get to the rest of the bill, we can address how things, like the misrepresentation section, are going to manage it when there’s a joint policy where one party has misrepresented. I’m interested to hear from the Minister.

Thank you, Mr Chair. I think the Hon Dr Duncan Webb, doctor of law, is at risk of becoming a serial litigant, but, unfortunately, what he’s trying to litigate is unusual. My first question is: why the heck didn’t he raise this during select committee? Why is it so pressingly important now?

Even if you accepted that he chose not to raise it through a long session of select committee, to now raise issues such as “avoid from its inception” in these clauses—when in reality you will know as a lawyer, Dr Webb, that the questions you are raising are minutiae. No one raised any issues, either on behalf of the committee or as submitters to the bill, on any of these three issues. The member will know that the definition of “policy holder” does include a reference, and by implication in common law, it includes multiple policyholders. The argument he’s putting forward is spurious and is wasting the time of the committee, and I note he took the opportunity to talk for a full five minutes to raise three rather ridiculous questions.

I’ll just remind the Minister in the chair that these are matters for the Chair to consider.

I move, That debate on this question now close.

Thank you, Mr Chair. Well, the other thing I wanted to raise—and I see my friend and colleague the Hon Dr Deborah Russell is keen to have a question or two as well—is in relation to the Schedule to the bill, because that’s part of this, and, in particular, clause 3A of Schedule 1. I’m still perplexed as to why this is even in the bill, because clause 3A is a transitional provision around contracts between the insurer and broker about premiums.

I was criticised by the Minister—and pretty fearsomely, actually, and so I will respond; I think I should—because I was getting into the minutiae of the bill. Now, maybe the Minister was too busy socialising with members of the media, but that is the job of this part of the debate—to go through it on a clause by clause basis—and if the Minister doesn’t like it, well, you know, it’s actually his job. Thanks for coming along to the Chamber to answer questions on the clause, and you can see from what’s on the Table that we have got a lot of suggestions. This will be very important, because this bill actually affects a lot of commercial arrangements, and the discussions we have, whether or not you agree to any of the Amendment Papers, will actually inform how this bill is applied in practice in terms of the arrangement between insurer and brokers about premiums.

My question is about why we need a transitional provision in respect of contracts. I mean, if you look at clause 3A(3), it says, “This clause does not prevent the termination or variation of the contract or arrangement.”, so, in fact, we’ve got a totally redundant provision, because private arrangements fall outside of the bill—full stop. The bill makes it clear in its body that arrangements as to when premiums have to be paid by the broker to the insurer are subject to private arrangements, and then we’ve got this redundant provision which says transitional provisions don’t apply to private arrangements, so that’s entirely unnecessary.

I’d be interested to hear why these kind of unnecessary—and I see that that was put in at the Finance and Expenditure Committee, a select committee which, incidentally, Minister, I don’t sit on. I found it perplexing that you would criticise me for not raising things in a select committee that, whilst I did attend on a couple of occasions, I don’t actually sit on, and this, of course, is an opportunity for any member of the committee of the whole House to go through the bill. Thank you.

Thank you, Mr Chair. Look, I wasn’t intending to take a call, but I do want to take one now, and the reason is I do want to take up the cudgels on behalf of my colleague the Hon Dr Duncan Webb. I suppose I’m a bit perplexed as to why the Minister would choose to attack a member of this House for going into the minutiae—which is how it’s normally pronounced—of a bill. It’s exactly what is supposed to be done during the committee stage of a bill, especially for a member who, as he’s pointed out himself, doesn’t sit on the Finance and Expenditure Committee, but is also someone who has a deep interest in this area of law and quite a bit of expertise on it. I’m going to suggest to the Minister that any objections or questions that my colleague the Hon Dr Duncan Webb is raising are really worth listening to.

Now, having said all that, there is a particular thing that has been puzzling me, I suppose, since I looked at the detail of the drafting overnight. I want to look at clause 6(1) of the bill, on page 13. It says, “For the purposes of this Act,” and then what a “contract of insurance” means—it says, “For the purposes of this Act, … ‘contract of insurance’ means [yada, yada, yada] unless the context otherwise requires,” which just strikes me as pretty, well, loose, really. I mean, it means a contract of insurance unless we think it doesn’t mean a contract of insurance because of what’s around it. I’d just like a little bit of indication of elsewhere in the bill where the context might otherwise require. If the Minister could give me some examples within the bill of when a contract of insurance doesn’t mean a contract of insurance, I’d appreciate getting some explanation as to what that context might actually be.

I guess, you know, I could probably talk to my colleague the Hon Dr Duncan Webb, who kind of knows some stuff about insurance and the like, but, actually, I’d like to hear it from the Minister.

I move, That debate on this question now close.

The question is that the Minister’s amendment to Part 1 set out on Amendment Paper 125 be agreed to.

The question is that the Hon Dr Duncan Webb’s tabled amendment inserting new paragraph (c) in clause 3 be agreed to.

The question is that the Hon Dr Duncan Webb’s tabled amendment inserting new subclause (4) in clause 6 be agreed to.

The question is that the Hon Dr Duncan Webb’s tabled amendment to clause 7(1)(b) be agreed to.