When Transparency Meets Fairness in Insurance
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Published: 11 November 2025 | Reviewed: 15 November 2025
(3-minute read)
The Case in Brief
In March 2024, the Federal Court handed down a decision that tested how far Australia’s unfair contract terms regime could stretch into consumer insurance.
ASIC sued Auto & General Insurance Company Ltd, arguing that a clause in its home and contents insurance Product Disclosure Statements (PDS) — requiring insureds to “tell us if anything changes while you’re insured with us” — was unfair under s 12BF and s 12BG of the ASIC Act 2001 (Cth).
Justice Jackman dismissed the case. He held that the clause was clear, necessary, and not unfair. The decision re-established a boundary between transparency and overregulation - and confirmed that not every ambiguity is an abuse of power.
The Clause at the Centre
The disputed “Notification Clause” told customers:
“While you’re insured with us, you need to tell us if anything changes about your home or contents.”
ASIC claimed this created an open-ended, unfair obligation, leaving customers uncertain about what to report and at risk of policy cancellation or claim denial.
Auto & General argued that “anything changes” clearly meant changes to the information customers had already provided, such as property use, construction materials, or occupancy.
The Court agreed.
Justice Jackman reasoned that a literal reading, requiring customers to report every grocery purchase,would be absurd. Interpreted contextually, the clause simply required updates to previously disclosed facts that determined underwriting and risk.
The Legal Test - What Is “Unfair”?
Under s 12BG(1) of the ASIC Act, a term is unfair if:
it causes a significant imbalance in the parties’ rights;
it is not reasonably necessary to protect the advantaged party’s legitimate interests; and
it causes detriment if relied on.
The Court found none of these applied:
The clause balanced the parties’ interests by ensuring accurate risk information.
Auto & General’s underwriting policy showed a legitimate need for updates.
There was no evidence of real-world detriment - only eight customers had their policies affected, and even then, the insurer often paid claims despite technical breaches.
Transparency - Meaning and Misunderstanding
Perhaps the most significant aspect of the judgment was its treatment of “transparency”.
Justice Jackman held that transparency is not the same as simplicity. It is:
“Clarity of meaning - not avoidance of complexity.”
He warned that requiring insurers to use perfectly plain language would ignore the technical precision that insurance contracts necessarily demand.
Transparency, therefore, is about understandable purpose, not grammatical purity.
The Court’s Broader Reasoning
The decision ties into two key statutory frameworks:
The Insurance Contracts Act 1984 (Cth) - especially ss 13–14 on the duty of utmost good faith and s 54 on post-contractual acts; and
The ASIC Act 2001 (Cth) unfair terms regime.
Justice Jackman emphasised that both statutes coexist — the ASIC Act focuses on structural fairness, while the ICA ensures good-faith conduct.
Together, they form a “twin system” of fairness: one before conflict, one after.
Clean Law Connection - Escrow Oversight in Contract Design
Where ASIC v Auto & General highlights the limits of regulation, Clean Law’s Two-Lawyer Escrow Oversight Model demonstrates the power of pre-regulatory design.
Under Clean Law’s structure:
Financial and legal accountability are separated - one lawyer controls funds; another controls advice.
Every client instruction and financial step is independently verified through escrow, removing ambiguity and imbalance.
Transparency is built into the structure, not left to interpretation.
In essence, Clean Law’s model makes what this judgment calls “transparency” a living process rather than a static clause.
If insurers or legal practices applied this two-lawyer model, regulators would face fewer “unfair term” disputes - because clarity and fairness would be embedded from the start.
Reflection - Fairness Through Structure, Not Litigation
ASIC v Auto & General clarifies that fairness is not about erasing every power imbalance but about ensuring that power is exercised within understood limits.
The Court’s reasoning mirrors Clean Law’s philosophy:
structure, transparency, and oversight prevent unfairness better than regulation can repair it.
This decision marks a return to principle - that contracts can be fair, not because law demands it, but because design ensures it.
Request a Confidential Consultation to structure your client or insurance relationships so clarity, not conflict, governs your obligations.
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Read more about ASIC v Auto & General Insurance Company Limited [2024] FCA 272
By Nicky Wang
Principal Solicitor
Legal Liaison Ltd (trading as Clean Law)
Prepared in accordance with public-interest governance,
annual Law Society trust-account audits, and ACNC-reported standards.
Disclaimer: This page is intended to provide general information only and is not legal advice. The contents may not reflect the most current legal developments and do not take into account your individual circumstances. You should not act or refrain from acting on the basis of this information without obtaining legal advice tailored to your situation.
