Section 6 provides an avenue for a plaintiff to recover damages or compensation directly from the defendant’s insurer, in certain circumstances. The section also provides for a plaintiff to assert a ‘statutory charge’ over all insurance moneys which may become payable under the insurance contract as a result of the defendant’s liability to the plaintiff. This arrangement has caused headaches in the past, which are well known in the industry.
The Australian Securities and Investments Commission (ASIC) has released class waivers which will allow eligible financial technology (fintech) businesses to test certain products and services without needing to obtain an Australian financial services licence or credit licence. ASIC has stated that this exemption is unique, with no other major jurisdiction having implemented a class waiver which allows eligible businesses to notify the regulator and commence testing without an individual application process.
Technology assisted document review (TAR) has been ordered for the first time in Australia by the Victorian Supreme Court. Given the large number of documents being created every day and the need to deal with cases at proportionate cost, it was inevitable that Australian courts would follow the US, UK and Irish courts by endorsing TAR in appropriate cases.
The recent judgment in McConnell Dowell Constructors (Aust) Pty Ltd v Santam Ltd & Ors (No 1)  VSC 734 ordering parties to employ TAR means potentially altering the discovery process and lowering litigation costs arising from document review in large document cases if in the future TAR is more readily permitted in litigation.
Australian Courts in 3 different jurisdictions have recently considered the issue of whether an offer of settlement was ‘a genuine compromise’ warranting an order for indemnity costs. The results in each case demonstrate the factors that a Court will weigh up in determining an entitlement (or otherwise) to indemnity costs. Insurers and their advisors should be aware of these factors before making walk away offers (and offers of compromise) in litigated proceedings, to ensure that maximum costs protection is obtained in the circumstances of each particular case.
Car financier BMW Australia Finance Limited (BMW Finance) has given the Australian Securities and Investments Commission (ASIC) an enforceable undertaking whereby BMW Finance will implement Australia’s largest consumer credit remediation program to compensate customers for its responsible lending failures. BMW Finance provides motor vehicle finance to consumers, both directly and through a network of motor vehicle dealers.
The enforceable undertaking follows previous regulatory actions taken by ASIC in relation to BMW Finance’s lending and collections activities, with ASIC having issued 22 infringement notices to BMW Finance in February 2016 for breaching consumer protection provisions in relation to repossession of motor vehicles and responsible lending breaches.
In Allianz Australia Insurance Ltd v Smeaton  ACTCA 59, the Court of Appeal of the Supreme Court of the ACT dismissed an appeal by Allianz in relation to a claim that arose from a jet ski accident on the Ross River in Queensland and ordered Allianz to pay costs of the appeal. The accident resulted in an 18 year old man having his left leg amputated below the knee.
Todd Smeaton had taken out a Club Marine insurance policy with Allianz over a jet ski. The third party liability provisions of the Policy covered the legal liability of Todd Smeaton when the jet ski was under his control and liability of other persons using the jet ski with his approval. There was an exclusion that operated where the jet ski was under the control of ‘an unlicensed person when a licence is necessary.’ At the time of the accident, Scott Smeaton was driving the jet ski with his brother’s approval and had a NSW boating licence, but not the appropriate Queensland licence.
For Insurers, an effective digital strategy is critical for long-term success. Insurers are already looking to innovate, both to stay ahead of legacy competitors and to pre-empt the erosion and disruption of established business models by ambitious and nimble digital start-ups.
DLA Piper has put together a Digital Transformation in the Insurance Sector White Paper to examine the key legal, regulatory and commercial challenges and issues facing insurers, as they seek to optimise their operations and processes using new technology to revolutionise their organisation and the wider market.
This paper explores the following key digital transformation themes from an insurance sector perspective:
- Redesigning the customer journey;
- Agility and simplification;
- Rethinking traditional models;
- Machine learning and advanced analytics;
- From people to software; and
- How digital is changing the regulatory landscape.
The Full Court of the Federal Court has dismissed an appeal concerning the operation of section 54 of the Insurance Contracts Act and contribution between insurers, in a case which is understood to have had its genesis in the Court’s Insurance List for short matters:
The appeal was brought by the Watkins Syndicate 0457, which had insured a pleasure craft yacht against damage during the period 1 December 2012 to 1 December 2013. The respondents to the appeal were Pantaenius Australia Pty Ltd (and other insurers), who had issued a policy providing direct cover in relation to a Fremantle to Bali race (and return) that the yacht participated in during the Watkins policy period. The yacht ran aground on the return trip from Bali when heading for Darwin. The Pantaenius policy covered the loss and paid out the owner. Pantaenius claimed contribution from Watkins.
Earlier this year, the Government announced that it would introduce an industry funding model for the Australian Securities and Investments Commission (ASIC), commencing in the second half of 2017. The Government has now released two papers: a proposal paper which provides a high-level overview of how the industry funding framework could be applied and a supplementary technical paper which provides details of ASIC’s costs of regulating each sector and metrics as to how levies could be calculated.
Under the proposed industry funding model, ASIC’s costs of regulating each sector will be recovered from entities operating in that sector. The financial advice sector and insurance sector are each subject to a range of potential levies which are summarised below.
The proposed levies for the financial advice sector depend on the type of advice provided:
- Licensees that provide personal advice providers on Tier 1 products to retail clients will pay a levy of $960 per adviser listed on the financial advisers register (minimum of $960 levy is payable for entities with no advisers listed on the register);
- Licensees that provide personal advice providers on Tier 2 products to retail clients will pay a $1,500 annual levy;
- Licensees that provide general advice only to retail or wholesale clients will pay a $920 annual levy; and
- Licensees that provide personal advice to wholesale clients only will pay a $170 annual levy.
The proposed levies for the insurance sector depend on whether the entity is an insurance product issuer or an insurance product distributor:
- Issuers will have to pay an anticipated minimum levy of $20,000, plus $0.59 for each $10,000 of net premium review or net earned premium above $5 million;
- Distributors will pay a $2,400 annual levy; and
- Risk management product providers will pay a $4,500 annual levy.
The Government is seeking feedback to the measures outlined in the papers, with roundtables being held during the week commencing 28 November 2016 to provide stakeholders with the opportunity to share their views. Parties interested in participating in these roundtables should send their contact details and sector of interest to ASICfunding@treasury.gov.au. Written submissions may also be made during the consultation period, which ends on 16 December 2016. However, additional public consultations will be held on any legislation prior to it being introduced before Parliament.
This blog was co-authored by DLA Piper graduate solicitor Ann-Marie Coleman.