WHAT IS INSURANCE LAW?
Insurance law is the practice of law surrounding insurance, including insurance policies and claims.
The three categories of insurance law
There are three major categories of insurance law:
- Regulation of content of insurance policies: the insurance company will hire lawyers, known insurance defence attorneys, to represent the insured if they are sued for something related to their insurance contract
- Regulation of claim handling: the second category of insurance law helps an insured determine when an insurance company must pay a claim
- Regulations of the business of insurance: insurance companies hire attorneys to make sure the company complies with all varying state laws and regulations that may be applicable.
Terms to be familiar with
INSURED:
the person who generally receives the insurance benefit. With regard to life insurance, the ‘insured’ is the person whose life is insured, and the person who receives the benefit is known as the ‘beneficiary.’
INSURANCE BROKER:
a person who is licensed to act as an advisor on insurance matters and arrange insurance cover on behalf of a client.
POLICY:
a contract which outlines the coverage and what the insurance company will pay in the event of a loss.
PREMIUM:
the money the insured pays to the insurance company for their policy coverage.
COVERAGE:
the types of loss or damage the insurance company will cover.
CLAIM:
a request for benefits the insurance makes when a loss occurs.
BENEFIT:
the money or services an insurance company provides in the event of a loss or damage to the insured items noted in the policy.
Legislative and regulatory framework
At the Commonwealth level, the insurance industry is governed by two primary pieces of legislation - the Insurance Act 1973 and the Insurance Contracts Act 1984. Chapter 7 of the Corporations Act 2001 governs the regulation of insurance intermediaries such as agents and brokers.
The general insurance industry in Australia is regulated by a prudential regulator and a corporate regulator. The prudential regulator is the Australian Prudential Regulation Authority (APRA). APRA are responsible for the general administration of the Insurance Contracts Act 1984, monitoring and promoting market integrity and consumer protection and licensing.