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Are you considering starting an Underwriting Agency in Australia? Here’s what you need to know

I have numerous conversations with people in Australia, UK and USA looking to start an Underwriting Agency in Australia and seeking to understand what’s involved from a regulatory perspective. Typically the clients in UK and USA are managing existing MGA’s across UK, Europe and USA. Australian clients are typically people who have worked at an insurer, broker, other underwriting agency or are currently managing an agency that is an AR of an insurer. Based on my experience, here are my top practical tips: 1. Understand the time frame It’s easy to feel a little overwhelmed by the task ahead however, rest assured, it’s a well-worn path although a sound plan is critical. Assuming you have landed on your insurance product offering and services (such as claims handling), some of the things you need to consider: as an underwriting agency you need to operate under a binder with an APRA regulated insurer. This can either be a general insurer (Australian based) or Lloyds underwriter. It’s important to have the binder discussions advanced as a draft copy of the binder (including the schedule(s) but unsigned) needs to be submitted as part of your AFSL application (see point 2). Binder discussions will also include claims management and complaint management. if you will be using Lloyd’s capacity you need to consider the time-frame for becoming a Lloyd’s coverholder. This requires engaging a sponsoring Lloyd’s broker and/or managing agent and Lloyd’s Australia. if the company (and including the ultimate parent) who controls the Australian licensee is based overseas with overseas domiciled directors you need to account for the time to obtain fit and proper checks from those jurisdictions the time to obtain an AFS Licence; and setting up your business including registration, systems, people and a myriad of other tasks and activities 2. Do you need an AFSL? An Underwriting Agency generally is required to hold an AFS Licence for general insurance products with financial product advice, dealing, and claims handling (if agreed by the insurer) authorisation. You do not need to hold an AFSL if you are an authorised representative of a suitably authorised licensee or can rely on an exemption. If you are intending to provide financial services to Wholesale clients only, there is an exemption for APRA regulated insurers and Lloyds underwriters. However, this creates practical issues in dealings with insurance brokers plus most Agencies prefer the governance that a Licence affords. 3. Setting up a business in Australia There are the usual steps involved in setting up a business in Australia, including: choosing the company type and shareholder/ownership structure registering the company with ASIC apply for an ABN and register Business name(s) RG 121 is an ASIC guide is for people or companies from overseas who propose to conduct a financial services business in Australia. 4. What are the people requirements for AFS licensing? The main requirements are: the fit and proper requirement – ASIC must ensure that your key people meet the requirements of the fit and proper test. This […]
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GI Code Governance Committee – 2026-27 Priorities

Following a period of industry consultation the General Insurance Code Governance Committee (CGC) have set their priorities for 2026-27. Enduring priorities The CGC enduring priorities are the ones that underpin its work, year on year. These areas are always a priority because they present the most serious risk of detriment to consumers or have the potential to undermine confidence in industry’s commitments to customers. The CGC continues to prioritise: Code breaches that result in significant consumer detriment Code breaches that cause disproportionate detriment to vulnerable or disadvantaged consumers New or emerging risks Timely, accurate and transparent reporting from insurers. Main priorities for 2026-27 In 2026-27, the CGC will focus resources on two priority areas through targeted compliance monitoring, engagement, guidance and reviews. The new Code: development and implementation Supporting industry implementing the new Code effectively will be a major focus for the CGC in 2026-27. A smooth transition will help insurers embed new obligations effectively, ensure consumers receive the intended protections in practice and help deliver the full benefits of the reforms. Once the new Code is finalised, the CGC will focus on supporting consistent and effective implementation across the industry. The CGC will engage with insurers to promote understanding of new and amended obligations, clarify expectations and help insurers consider how the changes interact with existing compliance and monitoring requirements. The CGC will update existing resources and develop new guidance to support the implementation of the new Code. The CGC will also create resources for key stakeholders, such as consumer advocates, to help them understand how the new Code operates in practice. Motor claims handling and motor repairs The CGC will prioritise motor claims handling in response to ongoing concerns about delays, repair outcomes and insurers’ oversight of third-party providers. These issues continue to drive high levels of consumer complaints and can significantly affect consumers’ financial security, mobility and confidence during stressful circumstances. The CGC identified motor vehicle insurance complaints as an emerging area of concern last year. Given the continued volume of complaints and ongoing concerns about delays and repair outcomes, the CGC will undertake a targeted review in early 2026-27 into motor claims handling and repairer management. Through this work, the CGC aim to identify and address the key drivers of rising motor insurance complaints, with a particular focus on insurers’ oversight of repair networks and how insurers manage and respond to consumer complaints. Continuing activities Temporary accommodation and supporting customers experiencing vulnerability The CGC will continue to prioritise temporary accommodation arrangements, particularly where customers experiencing vulnerability may require additional support. This work is important because temporary accommodation issues can have a significant impact on customers’ safety, wellbeing, stability and recovery following an insured event. In early 2026-27, the CGC expect to publish its inquiry into how insurers meet their Code obligations to identify and support customers experiencing vulnerability in temporary accommodation arrangements. Following publication, the CGC will engage with insurers on its findings, including any identified compliance concerns and opportunities to improve industry practice. The CGC […]
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The Hidden Risks of Letters of Appointment for Brokers

A recent case in the NSW Supreme Court has highlighted the hidden risks, and care required, by brokers using letters of appointment Sphere Healthcare Pty Ltd v Allianz Australia Insurance Ltd [2026] NSWSC 579 The case involved a breach of the duty of disclosure for failing to disclose the storage of bulk ethanol that exceeded the capacity of the dangerous goods area and was placed next to the factory. The factory was destroyed in a fire and the insurer successfully denied indemnity. The insured manufactured health care products and infant formula however, as a result of the COVID-19 pandemic, the insured decided to make hand sanitiser and sought cover under an ISR policy. However, during the period that the insured was trying to source ethanol (to use in the production of hand sanitiser), the insured changed brokers. My focus for the purposes of this article is the circumstances of the appointment of the broker. The circumstances In parallel with the sourcing of a large quantity of ethanol, the Group (who had recently acquired the insured), was working with three insurance brokers to source insurance for the group. The Group wanted to keep the ISR policy which the holding broker had arranged. The new broker asked the insurer to transfer the ISR policy, while the holding broker asked the insurer to cancel it. After some confusion caused by the fact that the new broker’s letter of appointment was back-dated, the insurer issued a new policy schedule and wording but for the same premium. [4] The appointment of the holding broker 4 months prior to the fire and following a tender process, the insured provided the holding broker with a letter of appointment [76]. The Court highlighted the insured’s discussions to change brokers; notwithstanding the letter of appointment, the Group was continuing to seek cheaper insurance through the new broker. The insured emailed the new broker, pressing for the best price, “Please try any good strategies to get us a good package deal”. The insured proposed to “fully follow” some policies arranged by the holding broker, including for the relevant site, and then use the new broker to arrange other policies, “This way, the total cost is still much lower than the current [holding broker] pricing.” But the policies arranged by the new broker “cannot be backdated”. Nor did they want to pay “broker fees twice”. It was decided to appoint the new broker on receiving confirmation that the policies arranged by the holding broker “will remain unchanged after [the new broker] takes over, and we won’t be double charged.” [127] Back-dating the letter of appointment for the new broker In order … to take over some of the policies”, the new broker recommended that its appointment be backdated to 29 February 2020. The insured was asked to photocopy a letter onto the Group’s letterhead and to sign and return the document that day. In respect of the policy for the relevant site, the new broker noted “to take over, premium amended”. […]
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The ecosystem of Insurance as a fairness mechanism

Over the past few days I’ve been involved in a number of fascinating discussions with insurance leaders from claims, product and pricing and repairers, loss assessors, brokers and experts (engineers etc). The conversation has always led to the role of fairness in insurance. This concept is underpinned by a legal and code structure that requires services and products to be provided efficiently, honestly, fairly, transparently and timely, acting with the utmost good faith. I have been thinking through a framework that operates as an insurance ecosystem providing procedural fairness delivering fair outcomes. This does not mean pay every claim. Far from it, but an adverse decision would be arrived at efficiently and be part of a robust decision-making process where the insured was an intrinsic part of the process. I welcome your thoughts on the components of an ecosystem that operates as a fairness mechanism. I’ve provided some of my initial thinking to promote the conversation: everyone involved in the ecosystem is focused on fairness through conduct, behaviors and compliance with laws and codes; Insurers design and act within fair frameworks and systems. Such as triaging claims and complaints at lodgement so that complexity and vulnerability characteristics are identified early and specialist resources allocated before problems arise; consumer advocates, brokers and claimant intermediaries act as the voice of the customer however the system acts as a customer advocate when the customer is unrepresented; the system starts with a proposition that: the claim is covered unless the evidence shows otherwise; the complaint is valid until the evidence shows otherwise – with short time frames for the evidence to show otherwise; the use of AI to streamline decision-making and ensure that the right people with the appropriate levels of skills, knowledge and authority are involved at an early stage where the policy/claim is not atypical (such as the early indicators of characteristics or complexity and vulnerability); frontline staff act as the guardians of the system and provided with the training, systems and tools to, for example; (1) resolve complaints at first point of contact, (2) identify complexity and vulnerability; and (3) challenge an experts report that they don’t understand so that a defective report doesn’t become part of the ecosystem; the time from ‘IDR-EDR-Determination’, is reduced from months or years to weeks; expert reports are truly independent and factual that anyone in the system can rely on in good faith as the basis for conversation or settlement; product design and distribution flows through marketing – product design and pricing – sales – underwriting – claims; distribution processes align product design to customer needs, objectives and requirements while enabling freedom of choice; unconscious bias is removed from the system; remuneration is merely an output of the value that a person contributes to the system and the system manages inherent conflicts the system ensures that relevant resources are allocated to the complex, the vulnerable, the difficult; the system includes controls that manages, regulates, or directs the behavior of people, processes, or systems to achieve […]
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What does it mean to carry on an insurance business in Australia?

In order to determine whether you need to be: authorised by APRA to carry on a general insurance business in Australia (Part III Division 1 Insurance Act 1973)and/or hold an Australian Financial Services Licence (AFSL) to provide financial services in Australia (such services include general insurance) (Section 911A Corporations Act) its necessary to consider whether you are carrying on an insurance business in Australia. Sources: Sutton on Insurance Law, Enright, Merkin, Hawke, Lawbook Co 2025 and ASIC Regulatory Guide RG 121 Carrying on Business The concept of ‘carrying on a business’ has been interpreted by the Courts and is also affected by section 21 Corporations Act. It should be noted that carrying on a business in Australia depends on the factual circumstances. However generally: include the degree to which a body corporate’s activities in Australia are conducted with system, repetition and continuity; the relevant activity need not generate or be motivated by profit; the business may be a carried on as part of or in conjunction with any other business; and it may be carried on alone or in conjunction with others. In Australia Section 21 provides that a body corporate has a place of business in Australia if the body corporate: establishes or is using a share transfer office or share registration office in Australia; or is administering, managing, or otherwise dealing with, property situated in Australia as an agent, legal personal representative or trustee, whether by employees or agents or otherwise. Section 21(3) provides a number of factors that in and of themselves do not indicate that a body corporate carries on a business in Australia. If you: a) are or become a party to a proceeding or effect settlement of a proceeding or of a claim or dispute; (b) hold meetings of your directors or shareholders or carry on other activities concerning your internal affairs; (c) maintain a bank account; (d) effect a sale through an independent contractor; (e) create evidence of a debt or create a charge on property; (f) secure or collect any of your debts or enforce your rights in regard to any securities relating to such debts; (g) conduct an isolated transaction that is completed within 31 days, not being one of a number of similar transactions repeated from time to time; or (h) invest any of your funds or hold any property Inducing If you engage in conduct that is ‘intended to induce people’ in Australia (or you engage in conduct that is likely to induce people in Australia) to use financial services you provide, then you will need to hold an AFS licence, unless an exemption applies. This is because of the deeming provision in s911D, which says that such conduct is ‘taken to be’ carrying on a financial services business in Australia. ASIC have granted specific exemptions that may apply: see ASIC Corporations (Foreign Financial Services Providers—Limited Connection) Instrument 2017/182 for ‘inducing’ wholesale clients, which applies until 31 March 2027. (refer RG 121.50) ASIC provides the following example in Table […]
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APRA calls for a step-change in AI-related risk management and governance

Artificial Intelligence (AI) is being rapidly adopted across APRA-regulated industries as entities seek to realise benefits to their businesses and customers. AI presents great opportunity for productivity and efficiency, and failing to embrace AI may put businesses at a strategic disadvantage. AI also has the potential to create new risks and escalate existing challenges. To understand and assess the current state of AI adoption and associated prudential risks, APRA conducted a targeted engagement on a group of selected large banks, insurers and superannuation trustees in late 2025. The purpose of this letter is to outline these observations and APRA’s expectations in managing AI related risk. Lessons drawn from APRA’s observations of these larger entities, will assist other entities who may be earlier in their AI adoption journey.
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The 5 compliance activities your business must be doing

Most firms in the insurance industry have reasonable compliance infrastructures in place (the pipeline). However, without data and information flowing through the pipeline, the adequacy of the compliance measures remains in doubt, especially as a means to protect the business, its people, customers, and stakeholders and to meet regulatory requirements on an ongoing basis. Worse, the pipeline, without data & information, provides false assurance to leaders, management and the board. However, by focusing on implementing and embedding 5 key compliance activitiesacross the business, the compliance measures will create a cadence that enables the firm to self-regulate, self-manage, self-report and continually improve business operations, the customer experience and pursue opportunities for growth with confidence. 1. Incidents An incident is an event that occurs where something has gone wrong. Adopting a simple definition of an incident has been identified by ASIC as a key driver of identifying and recording a high number of incidents. All businesses have incidents, things go wrong, errors occur, bugs are present, processes are not foolproof. Firms who are not reporting any incidents are simply not identifying them. Eventually the incident will result in harm or detriment. Firms should adopt a wide view of incidents including operational risk incidents, cybersecurity incidents, people incidents, change management incidents, financial & insurance incidents and startegic risk incidents in addition to compliance, legal and regualtory incidents. Your focus should be training your people (and providing artefacts) that enable them to identify, raise, and quickly report incidents that arise in their area of operation. A more skilled person can then triage incidents and funnel them down the correct pipeline (such as a likely breach or breach of regulatory or Code oprations or an operational risk or a privacy matter or a potential disruption event such as cybersecurity). 2. Complaints ASIC and the Insurance Brokers Code Compliance Committee have highlighted the under-reporting of complaints across general insurance. As at 30/06/2025 ASIC’s IDR data dashboard shows that 81.7% of general insurance complaints were lodged by only 20 firms. Fair, timely and effective IDR processes that provide a genuine opportunity for redress are a key consumer protection and can produce beneficial outcomes for both consumers and firms. A positive complaints management culture is imperative to achieve these outcomes— one that takes a proactive approach in identifying a ‘complaint’, and that does not compound or further delay the recovery of customers and businesses from distressing events. ASIC Cause for complaint: Complaints handling in general insurance Report 802 | December 2024 Understanding that a complaint is simply an expression of customer dissatifaction shifts the culture of complaints to a customer experience improvement rather than a compliance obligation. All complaints must be recorded by the firm including those resolved at first point of contact. Not only does this lead to better customer experiences and business improvements (through the identification of systemic issues) it also enables the firm to meet its regulatory and Code obligations including the reporting of IDR data. 3. Conflicts of interest Managing conflicts of interest is […]
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General Insurance – do you need an Australian Financial Services Licence?

An AFS licence authorises you and your representatives to provide financial services to clients. Part 7.6 Division 2, Corporations Act sets out the requirements to be licensed or authorised. Generally, a person who carries on a financial services business in Australia must hold an Australian financial services licence (AFSL) covering the provision of the financial services (s 911A). Meaning of financial service A person provides a financial service (relevantly for general insurance), if they: provide financial product advice; deal in a financial product; or provide a claims handling and settling service. General insurance products are financial products (s764A), subject to certain exemptions for example surety bonds and reinsurance. This typically applies to insurers, underwriting agencies, insurance brokers, TPAs, and claimant intermediaries. What is financial product advice? A recommendation or a statement of opinion, or a report of either of those things, constitutes financial product advice under s766B (also refer RG 36.19) if: (a) it is intended to influence a person or persons in making a decision about general insurance products, or could reasonably be regarded as being intended to have such an influence; and (b) it is not exempted from the definition of financial product advice. Financial product advice will generally involve a qualitative judgement about, or an evaluation, assessment or comparison of, some or all of the features of one or more general insurance product(s). (refer RG 36.20) What is the meaning of ‘deal in a financial product’? The following conduct constitutes dealing in a financial product within the meaning of s766C(1): applying for or acquiring a general insurance product; issuing a general insurance product; varying a general insurance product (such as by endorsement); or disposing (cancelling) of a general insurance product. Arranging for a person to engage in the above conduct also constitutes dealing. Arranging refers to the process by which a person negotiates for, or brings into effect, a dealing in a general insurance product (e.g. an issue, variation, disposal, acquisition or application). The person who is arranging may be acting for a product issuer, seller or consumer. Arranging includes ‘arranging contracts of insurance’ (RG 36.38-39) Your conduct may constitute arranging if (RG 36.43): your involvement in the chain of events leading to the relevant dealing is of sufficient importance that without that involvement the transaction would probably not take place (e.g. where you are the main or only person consumers deal directly with in a particular transaction); your involvement significantly ‘adds value’ for the person for whom you are acting; and you receive benefits depending on the decisions made by the person for whom you are acting. Referrals You do not need to hold an AFS licence if you provide a financial service that consists only of a referral (RG 36.72), that is: informing another person that a licensee (or one of its representatives) is able to provide a particular financial service or class of financial services; and giving that other person contact details for the licensee or representative. You must disclose any benefits (including commission) […]
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Using AI efficiently, honestly and fairly in general insurance

AFS Licensee’s have a general obligation to ensure that they provide their financial services efficiently, honestly and fairly (s912A(1)(a) Corporations Act). This obligation is viewed as an overarching obligation. If you fail to comply with the other general obligations, it is unlikely that you will be complying with the ‘efficiently, honestly and fairly’ obligation. (ASIC RG 104.55) However, the ‘efficiently, honestly and fairly’ obligation is also a stand-alone obligation that operates separately from the other general obligations. (RG 104.56) The relevant industry codes also include similar obligations: [we] will be honest, efficient, fair, transparent and timely in our dealings with [customers]. (GI Code of Practice paragraph 21) We, our staff, and representatives will act honestly and with integrity in all dealings.(Insurance Brokers Code of Practice Section 3.0(b)) It is clear that the obligation requires ethical behaviour It is not necessary to establish dishonesty in the criminal sense. The word ‘honestly’ may comprehend conduct which is not criminal but which is morally wrong in the commercial sense. The word ‘honestly’ when used in conjunction with the word ‘fairly’ tends to give a flavour of a person who not only is not dishonest, but also a person who is ethically sound Foster J in ASIC v Camelot Derivatives Pty Ltd (in liq) (2012) 88 ACSR 206 [201] FCA 414 at [69] The governance of AI The financial service laws and industry Codes are technology neutral. That is, the laws and policies focus on desired outcomes or functions rather than prescribing the use of specific technologies. It is therefore irrelevant whether a firm uses humans, technology or a combination of both to perform financial services tasks and services. The obligation ‘efficiently, honestly and fairly’, applies. This was emphasised in APRA’s letter to regulated-entities 30 April 2026 APRA expects Boards, at a minimum, to maintain sufficient understanding and literacy with respect to AI in order to set strategic direction and provide effective challenge and oversight This obligation, at an operational level, extends to executives, management, responsible managers, accountable persons and business leaders. That is, such persons must have sufficient skills and knowledge of AI to be able to discharge their respective duties. ASIC emphasised this point in their open letter to industry 8 May 2026 ‘Entities need to have robust incident response plans. Whether an entity faces a basic phishing attempt or a more sophisticated cyber attack, the underlying cyber risk management principles of govern, protect, detect, respond remain the same. ‘Appropriate cyber risk management starts at the leadership of licensees and participants. Boards and executives must ensure systems are tested, weaknesses are addressed early and that action is taken before threats can be exploited. AI Ethics Principles The Department of Industry, Science and Resources (Australian Government) updated Australia’s AI Ethics Principles on 2 December 2025. The principles aimed to help: achieve safer, more reliable and fairer outcomes for all Australians reduce the risk of negative impact on those affected by AI applications businesses and governments to practice the highest ethical standards when designing, […]
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