Accountability 30 years on: Insurance Contracts Act Reform

The Insurance Contracts Act 1984 (Cth) since inception has effected major reform to the law in this field. One of Australia’s most frequently cited pieces of legislation, it has had a major impact upon the law and practice of insurance. Given the importance of insurance to domestic and commercial activity and its pivotal position as a mechanism to manage exposure to risk, it is not surprising that this legislation has been the subject of extensive analysis in the courts and in legal literature. Furthermore the Act has, arising out of a 2009 review, been significantly amended by the Insurance Contracts Amendment Act 2013 (Cth). The principal amendments introduced are: two-fold: the Insurance Contracts Act 1984 (Cth) has been amended so that a failure to comply with the duty of good faith is now a breach of the Act; and disclosure and misrepresentation provisions under the Insurance Contracts Act 1984 (Cth) are amended and clarified.

Evidence in view: Matton Developments Pty Ltd v CGU Insurance Limited [2014] QSC 256

Rule 478 of the Uniform Civil Procedure Rules 1999 (Qld)(view by court) is silent as to the manner in which a court might be expected to exercise the discretion to order an inspection or demonstration under the rule and also as to the use which may be made of any inspection or demonstration ordered. The decision in Matton Developments Pty Ltd v CGU Insurance Limited [2014] QSC 256 provides guidance on both matters. This case provides some guidance on the circumstances in which a court may exercise its discretion to order a view or demonstration

Accounting for risk: The advent of capped conveyancing title insurance

Title insurance companies originating from America, have, in the past 15 years become part of the Australian conveyancing landscape. However for most residential freehold owners, their activities would be a mystery. A purchaser does not routinely obtain title insurance, with the companies presently focussing on servicing the mortgagee sector. While the lack of penetration in the residential purchaser market may be attributed to the consumer’s lack of knowledge, evidence from Ontario and New Zealand illustrates that title insurance is likely to become an additional cost in the conveyancing process in Australia. In this article we highlight the reasons why, and demonstrate how title insurers have, by working with the legal profession been able to subtly move the risk of responsibility for compensation for loss, (at least in the first instance) from the state to the insurer, but with the added benefit for the state and the conveyancing agents that the cost of the insurance is ultimately borne by the consumer. In New Zealand this development is being accelerated by the introduction of capped conveyancing title insurance. Whether title insurance will become part of the conveyancing process is no longer the relevant question for Australia, (it undoubtedly will), but the unknown issue is just how title insurance companies will work with conveyancing agents to infiltrate the market, and what response this infiltration will have in terms of the state’s view as to their continued role in the provision of assurance. We suggest that developments from New Zealand in relation to capped conveyancing insurance are likely to be replicated in Australia in the near future, and that the state’s role in providing an assurance fund will continue, though the state may seek to expand the areas in which the right to compensation is restricted.

Directors and officers insurance – Recent critical issues in Australia and New Zealand

Directors and Officers Liability Insurance (“D&O insurance”) has grown and evolved rapidly over the past 80 years to assume an important position in most corporations’ corporate governance and risk management strategies. This article focuses upon certain topical matters of particular concern to directors and officers including the availability of defence costs where a D&O policy is subject to a statutory charge; the commercial desirability of stand-alone “A-side” coverage, being the cover provided directly to directors and officers for loss resulting from claims made against them for wrongful acts; the impact of fraud and/or dishonesty upon D&O cover; and disclosure of the nature and extent of D&O cover to the directors and officers themselves and to third parties – in the latter case such access frequently being necessary to determine the economic viability of pursuing a proposed action against a company and its directors and officers.

Obama's law : analysis of a breakthrough law on healthcare access and lessons for the Portuguese health system management

ABSTRACT - The Patient Protection and Affordable Care Act shook the foundations of the US health system, offering all Americans access to health care by changing the way the health insurance industry works. As President Obama signed the Act on 23 March 2010, he said that it stood for “the core principle that everybody should have some basic security when it comes to their health care”. Unlike the U.S., the Article 64 of the Portuguese Constitution provides, since 1976, the right to universal access to health care. However, facing a severe economic crisis, Portugal has, under the supervision of the Troika, a tight schedule to implement measures to improve the efficiency of the National Health Service. Both countries are therefore despite their different situation, in a conjuncture of reform and the use of new health management measures. The present work, using a qualitative research methodology examines the Affordable Care Act in order to describe its principles and enforcement mechanisms. In order to describe the reality in Portugal, the Portuguese health system and the measures imposed by Troika are also analyzed. The intention of this entire analysis is not only to disclose the innovative U.S. law, but to find some innovative measures that could serve health management in Portugal. Essentially we identified the Exchanges and Wellness Programs, described throughout this work, leaving also the idea of the possibility of using them in the Portuguese national health system.

Health insurance as a strategy for access : Streamlined facts of the Colombian Health Care Reform

La reforma colombiana al sistema de salud (Ley 100 de 1993) estableció, como estrategia para facilitar el acceso, la universalidad de un seguro de salud que se adquiere mediante la cotización en el régimen contributivo o mediante la afiliación gratuita al régimen subsidiado, con la meta de cubrir a toda la población con un plan de beneficios único que comprende servicios de todos los niveles de atención. En el documento se analizan los principales hechos estilizados de la reforma en cuanto a cobertura del seguro y acceso y, mediante modelos logit, se estiman los determinantes de la afiliación y del acceso, con datos de las encuestas de calidad de vida de 1997 y 2003. Se destaca que la cobertura pasó del 20% de la población en 1993 al 60% en 2004, aunque parece imposible alcanzar la universalidad; la estructura y evolución de la cobertura muestran que los dos regímenes son complementarios, de modo que mientras el contributivo tiene mayor presencia en las ciudades y entre la población con empleo formal, el subsidiado tiene mayor peso entre la población rural y con bajos niveles de ingresos; por otra parte, el seguro tiene ventajas para la población subsidiada, con una mayor probabilidad de utilización de servicios, aunque el plan es inferior al del contributivo y existen barreras para el acceso.

Use and cost effectiveness of computer based training in the insurance industry

Training is essential to the growth and economic well-being of a nation. This need for training pervades all levels of industry, from a national level where a country’s well being is enhanced by training, to each company where productivity is improved, down to the individual whose skills are enhanced and as a result improve their position in the employment marketplace. The Australian Bureau of Statistics report ‘Training and Education Experience –Australia’ (ABS 1993) indicates that training in Australia is undertaken at a significant level with some 86% of employers undertaking some form of training. This is slightly higher in the Finance industry at a little over 89%. On the job training is undertaken by 82% of employers and off the job training is used by 47% of employers. In 80% of the off the job cases these courses were conducted in a conventional manner using an instructor. The remaining 20% of cases were either self paced (14%) or instructor based (6%). These latter cases could involve Computer Based Training (CBT). The report, referred to in the last paragraph, also indicates that a significant aspect of business in Australia is that 95% of businesses have less than 20 staff. This poses significant problems in that the ability to deliver effective training is limited. With businesses as small as these their size does not permit them to carry specialist training personnel so this role falls to the senior staff. These people already have a full workload and their ability to be able to take on training duties is limited. In addition these people were employed for their technical skills, not training. It may be that their ability to fill the role of a trainer is not good and as a result the training may not be very effective. In addition, small business has difficulty in releasing staff for training, The difficulties faced by small business were recognised by the Australian National Training Authority in their 1995 report which indicated that there was a need to develop a ‘training culture’ among small business employers. The authority made a commitment to provide flexible delivery strategies. This includes Computer Based Training (CBT). CBT has existed since the 1970’s. It came on to the scene with a flourish and tended to provide ‘page turning’ programs or ‘drill and practice programs’. In limited areas this form of training became popular but its popularity waned in the 80’s. With the advent of better graphical displays, larger and faster memory, and improved programs in the 1990’s the quality of CBT today is superior to those offered in the 70’s and has greater appeal. Today, still photographs and video clips can be displayed and made interactive. Because of this CBT is making a comeback and starting to have a greater impact. The insurance industry covers a wide range of companies in Australia, these companies vary in size from companies with employees in the thousands to companies with less than five staff. While the needs of the employees of each are similar the ability of these companies to deliver the training varies significantly. Any training can be divided into two parts. Internal or on the job training and external. External training deals with those aspects that concern the industry as a whole whereas internal training affects the individual company. Internal training would deal with matters like company procedures, company products and the like. External training deals with matters such as legislation, products generally, and the like. In the insurance industry the major problem arises with the small companies. Insurance companies would tend to be large in size and able to cover their training costs but the insurance brokers who would make up, numerically, the major number of companies would have a significant number of companies that fall into the 20 staffer less category. In fact many would have a staff of less than 5. While CBT can benefit all companies it is these small companies that could benefit from it the most. This thesis examines: • The place of CBT in training, its cost and effectiveness. • The incidence of CBT in the insurance industry and how the industry determines its effectiveness. • If a program that meets an industry need is able to be produced at a realistic price?

Catastrophic loss and the law : a comparison between 2009 Victorian Black Saturday fires and 2011 Queensland floods and Cyclone Yasi

This article explores insurability relating to loss occasioned by catastrophic events in Australia in the context of the current legal regulatory regime. The analysis includes two case studies, in which we juxtapose the Victorian Black Saturday fires in February 2--9 with the Queensland flooding and Cyclone Yasi (December 2010 - February 2011). We argue that the different responses to, and economic losses stemming from, these events illustrate the urgent need for a national regulatory and insurance regime for the prevention and alleviation of disasters and the management of their consequences.

The insurance function of contracts

One of the central problems in contract law is to define the frontier between legal and illegal breaches of promises. The distinction between good and bad faith is perhaps the conceptual tool most commonly used to tell one from the other. Lawyers spend a lot of energy trying to frame better definitions of the concepts of good and bad faith based on principles of ethics or justice, but often pay much less attention to theories dealing with the incentives that can engender good faith behavior in contractual relationships. By describing the economics of what Stiglitz defined as “explicit” and “implicit” insurance, I highlight the “insurance function” hidden in any promise with basically no mathematical notation. My aim is to render the subject intelligible and useful to lawyers with little familiarity with economics.

Do insurance defrauders want to be punished?

We analyze a Principal-Agent model of an insurer who faces an adverse selection problem. He is unable to observe if his client has a high risk or a low risk of having an accident. At the underwriting of the contract, the insurer requests the client to declare his risk. After that, the former can costly audit the truthfulness of this announcement. If the audit confirms a false declaration, the insurer is legally allowed to punish the defrauder. We characterize the efRcient contracts when this punishment is bounded from above by a legal restriction. Then, we do some comparative statics on the efRcient contracts and on the agent's utility. The most important result of this paper concerns the legal limit to a defrauder's punishment. We prove that there exists a uni que value of this legal limit that maximizes the expected utility of a high risk type. Facing this particular value of the legal limit to a defrauder's punishment, the insurer will effectively audit a low risk reporto We also show that this particular value increases with the probability of facing a high risk policyholder. Therefore, when this probability is sufRciently high, the nullity of the contract is not enough. From the point of view of a potential defrauder, the law should allow harder sanctions. This is an striking result because the nullity of the contract is a common sanction for this kind of fraud in the USA and in some European countries.