media release (23-123MR)

ASIC sues HCF Life for alleged unfair and misleading contract terms in insurance


ASIC has commenced civil proceedings in the Federal Court alleging that three types of insurance policies issued by HCF Life Insurance Company Pty Limited (HCF Life) contain unfair contract terms and could mislead the public.

The case involves standard form contracts issued under HCF Life’s ‘Recover’ range of insurance products.

ASIC alleges that the ‘pre-existing condition’ term in the contracts is an unfair contract term and could mislead the public because:

  • the term purports to deny coverage if a customer did not disclose a pre-existing condition before entering the contract, and a medical practitioner forms an opinion that symptoms of the condition existed prior to the customer entering into the contract, even if a diagnosis had not been made;
  • the term suggests that HCF Life can deny coverage even if the customer was not aware of the pre-existing condition; and
  • s47 of the Insurance Contacts Act prevents insurers from excluding coverage for non-disclosure of a pre-existing condition where the customer was unaware of the condition when taking out the insurance, and a reasonable person in the circumstances could not be expected to have been aware of the condition.

ASIC Deputy Chair Sarah Court said, ‘Insurers need to ensure that all terms in their contracts, including important pre-existing condition terms, accurately communicate the rights of customers. The inclusion of allegedly unfair and misleading terms can deter customers from making a claim, which is not a good consumer outcome’.

Ms Court said one of ASIC’s Enforcement Priorities is taking enforcement action with respect to unfair contract terms, including in insurance products.

‘Given the expansion of the unfair contract terms regime in April 2021 to include insurance contracts, ASIC’s current focus on enforcement action concerning unfair contract terms should not come as a surprise. Rather, it should serve as a reminder to providers of financial services, whose contracts are subject to the regime, that potentially unfair terms should be removed from their standard form consumer contracts,’ concluded Ms Court.

ASIC is seeking declarations that the term is void. ASIC will also seek injunctions and corrective orders. Further, ASIC is seeking a penalty regarding the allegation that HCF Life’s contracts are liable to mislead the public.


The term regarding pre-existing conditions appears in product disclosure statements (in substantially identical terms) for the following insurance products issued by HCF Life which are all products offered under HCF Life’s ‘Recover’ range of insurance products:

  • Cash Back
  • Smart Term
  • Income Assist (replaced by Income Protect from October 2021)

On 5 April 2021, the unfair contract term protections in Subdivision BA of the ASIC Act were expanded to include insurance contracts with consumers and small businesses. This was a result of a recommendation by the Royal Commission into Misconduct in the Banking, Superannuation, and Financial Services Industry (Recommendation 4.7 in the Final Report). Extending the unfair contract term protections to these kinds of insurance contracts was aimed at:

  • ensuring that consumers and small businesses receive the same protections from unfair terms in insurance contracts as they do for other financial services; and
  • encouraging insurers to improve the level of clarity and transparency in their contracts and remove potentially unfair terms.

On 9 November 2022, the Treasury Laws Amendment (More Competition, Better Prices) Act 2022 was assented to. Among other things, this Act will introduce civil penalties under the ASIC Act for breaches of the unfair contract term prohibition from 9 November 2023.

On 4 April 2023, ASIC issued proceedings against another insurer, Auto & General Insurance Company Limited, alleging that its standard form home and contents insurance contracts contained unfair contract terms (23-088MR).

Editor's note 1:

On 25 August 2023, the Court made timetabling orders for the parties and listed a case management hearing  for 29 February 2024.

Editor's note 2: 

On 27 February 2024, the Court made orders including that the case management hearing listed for 29 February 2024 be adjourned to 18 March 2024.

Editor's note 3:

On 15 March 2024, the Court made orders and listed the matter for trial on 11 and 12 September 2024. 

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