Utmost good faith and accountability in the spotlight of the Banking Royal Commission - Time to revisit the scope, applicability and enforcement of the duty

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry considered the insurance industry through case studies involving all stages of the insurance process. Serious wide ranging problems throughout the life and general insurance industry, including around case handling, settlement procedures, product sales and use of misleading and deceptive contract terms, revealed gross ignorance - if not deliberate disregard - of the inalieanable obligation of utmost good faith rooted in the Common Law and enshrined in the Insurance Contracts Act 1984 (Cth). This article examines the current scope, applicability and enforcement of this duty along with recent cases highlighting continuing operational uncertainty. It concludes with consideration of recommendations arising out of the banking Royal Commission and otherwise. As the intrinsic value of any insurance product lies in the ability to make a successful claim when an insured event occurs, particular attention is given to claims handling and settlement in utmost good faith contexts.