𝗖𝗹𝗮𝗶𝗺 𝗺𝗮𝗻𝗮𝗴𝗲𝗺𝗲𝗻𝘁 𝗮𝗿𝗿𝗮𝗻𝗴𝗲𝗺𝗲𝗻𝘁𝘀 – 𝗚𝗲𝗻𝗲𝗿𝗮𝗹 𝗜𝗻𝘀𝘂𝗿𝗮𝗻𝗰𝗲

Following on from my previous post on Distribution arrangements, I thought I would cover off the typical general insurance claim arrangements.

𝙁𝙞𝙣𝙖𝙣𝙘𝙞𝙖𝙡 𝙨𝙚𝙧𝙫𝙞𝙘𝙚𝙨 & 𝙡𝙞𝙘𝙚𝙣𝙨𝙞𝙣𝙜

Claims handling & settling services (CHSS) has been a financal service since 1 Jan 2022.

CHSS covers the activities as defined under section 766G Corporations Act.

The need to hold an AFS licence is determined by s 911A(2)(ek).

You need to hold an AFSL for CHSS if you are:

the insurer under the insurance product or an underwriting agency with authority from the insurer to provide CHSS;
an insurance fulfilment provider but only where you have authority to reject all or part of a claim;
an insurance claims manager aka TPA (acting for an insurer) but only where this is a primary part of your business. For example, if assessing or investigations is the primary part of your business, you don’t need an AFSL (Reg 7.1.04CB);
an insurance broker, but only if they have authority from an insurer to provide the CHSS. Brokers acting on behalf of insured’s can rely on the exemption & not hold an AFSL;
a claimaint intermediary, that is a person providing CHSS on behalf of an insured for a prescribed product other than insurance brokers, accountants, vets, travel agents, financial advisers & counsellors, property managers, estate management & public trustees.

An exemption applies for CHSS where the issuer of the general insurance product is Lloyd’s underwriters or an UFI.

A licensee may appoint others as an Authorised Rep to provide CHSS.

𝙂𝙄 𝘾𝙤𝙙𝙚 𝙤𝙛 𝙋𝙧𝙖𝙘𝙩𝙞𝙘𝙚

There are obligations for CHSS under the Code.

It is necessary to examine the definitions in Part 16 of the Code to determine how the Code applies to your business.

Service Supplier – means an Investigator, Loss Assessor or Loss Adjuster, Collection Agent, who is not an employee of the insurer but is contracted to manage claims on behalf of an insurer (including a broker) & any of their approved sub-contractors.

Investigator, Loss Assessor or Loss Adjuster, Collection Agent are all defined terms in Part 16.

External Expert means a company, entity, or a person who is not an Employee or a Service Supplier & is contracted solely to provide an expert opinion about the likely cause of loss or damage.

𝟮 𝗽𝗮𝗿𝘁 𝗽𝗿𝗼𝗰𝗲𝘀𝘀

It follows from the above, in order to determine your obligations under financial services laws & the Code, you need to understand:

1. Your requirement to hold an AFS Licence; &
2. The category you fall within under the GI Code

This starts with the questions (in context of CHSS):

what CHSS do you do?
how do you do the CHSS?
who do you do the CHSS on behalf of?