ARTICLE · 29 JULY 2012

When does interest begin to accrue under section 57 of the Insurance Contracts Act?

Colin Biggers & Paisley

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Insurers should have a reasonable period to investigate their positions before interest begins to accrue under the act.

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In brief - The date from which it becomes unreasonable for an insurer to withhold payment is crucial

Recent judgments have indicated that insurers should have a reasonable period to investigate their position before interest begins to accrue. A reasonable period is typically three months, although it can be as little as seven days or greater than four months.

Events occur after insured takes out income protection insurance

In March this year, in Summers v The National Life Association of Australasia (No 2) [2012] TASSC 9, the Supreme Court of Tasmania had reason to look beyond the usual "plus interest plus costs" stamp that traditionally follows a judgment with damages, with particular reference to section 57 of the Insurance Contracts Act 1984 (ICA).

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