ASIC has appealed the Federal Court's decision dismissing part of ASIC's proceedings against HCF Life Insurance Company Pty Ltd in respect of a 'pre-existing condition' term used in a range of products issued by HCF Life. On 28 October 2024, the Federal Court found that while the pre-existing condition term was liable to mislead the public, it was not unfair.
ASIC alleges that the term was liable to mislead the public and was an unfair contract term under the ASIC Act because it:
- purported to allow HCF Life to deny coverage if a consumer did not disclose a pre-existing condition before entering the contract, and a medical practitioner subsequently formed an opinion that signs or symptoms of the condition existed prior to the consumer entering into the contract, even if a diagnosis had not been made, and
- suggested that HCF Life could deny coverage even if the consumer was not aware of the pre-existing condition when entering into the insurance contract and a reasonable person in the circumstances would not have been aware of the condition,
in circumstances where section 47 of the Insurance Contacts Act prevents insurers from excluding coverage for non-disclosure of a pre-existing condition where the consumer 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 is appealing the decision of the Federal Court because it remains concerned that:
- the Court took into account the ameliorating effect of s 47 of the Insurance Contracts Act in assessing whether the term was unfair and that this effectively allows potentially unfair contractual terms to be cured by legislation that the ordinary and reasonable consumer would be ignorant of, and
- terms that are found liable to mislead the public can also be found not to be unfair.
