Proposals would disrupt business models: Faafoi

Options papers were released in April as part of the review of insurance contract law, which spun off a separate consultation on the conduct of financial institutions.

The options papers suggested a range of changes including amending the duty of disclosure, removing insurance-specific exemptions from unfair contract terms laws, a duty to design remuneration and incentives in a way that would promote good customer outcomes and making directors and senior managers personally liable if their entity did not meet its duties.

In a cabinet paper ahead of the options papers' release, Faafoi said he expected the industry to oppose some of the changes, particularly in relation to the exemptions from unfair contract terms rules.

“It will be important that we listen to both sides of the argument. The [Australian Royal Commission] has recommended removing Australia’s equivalent exemption so this is a battle that insurers will be fighting on both sides of the Tasman."