Section 54: It is all in the Act

Financial Lines General Insurance

Two recent decisions of the Western Australia Court of Appeal (Allianz Australia Insurance Ltd v Inglis [2016] WASCA 25) and the NSW Federal Court (Pantaenius Australia Pty Ltd v Watkins Syndicate 0457 at Lloyds [2016] FCA 1) show that section 54 of the Insurance Contracts Act 1984 is still causing trouble over 30 years after its inception.

The cases involved an assessment of whether the insurer’s denial of indemnity arose by reason of an act of the insured or third party, or whether it was merely because the policy did not cover the risk complained of. Section 54 can remedy the former, but not the latter.

In this update, Patrick Boardman (Partner) and Dean Pinto (Senior Associate) discuss both decisions and the implications for insurers.