ASIC’s new website provides streamlined access to licence management services including easy access to ASIC portals such as the new Regulatory Portal for applying for a new AFS Licence or managing an existing licence. In addition, the wesbite provides a wide range of very useful regulatory resources. Regulatory resources for AFS Licensees in general insurance The following pages are relevant for firms providing general insurance products or services: Note: APRA Regulated insurers should also refer to the resources on APRA’s webapge. I’ll cover these resources in a seperate article. regulatory resources search financial services insolvency corporate governance Regulatory resources research This page enables users to search for regulatory guides, information sheets, reports, ASIC consultations. forms and ASIC instruments. Advanced search functionality enables the search to be focused, relevantly, on financial services, financial reporting, dealing with ASIC, financial advice & technology. Financial services Any AFS Licensee in general insurance should bookmark this page There are a number of sub-categories which are very helpfully categorised as follows: regulatory reforms financial advice giving advice financial product disclosure design & distribution obligations dispute resolution reportable situations client money reporting financial accountability regime claims handling and settling AFS Licensees I would also recommend that you bookmark these pages: Information for AFS Licensees ASIC Regulatory Portal – Applications for a new AFS licence, variation or cancellation of an existing licence, or notifications of some changes to an existing licence. Information for AFS Licensees This page also includes links to: Do you need an AFS Licence? Applying for and managing an AFS licence AFS Licensee obligations Changing details and lodging forms varying or cancelling your AFS licence AFS Licensee obligations A comprehensive page that provides a great overview of your obligations as an AFS licensee with links to the relevant ASIC Regulatory Guides and Information Sheets. Insolvency As an AFS licensee (other than APRA regulated insurers), you must meet the base level financial requirements. This includes the solvency and positive net assets requirement – At all times you must be solvent (i.e. be able to pay all your debts as and when they become due and payable) and have total assets that exceed total liabilities (as shown in your most recent annual balance sheet lodged with ASIC), and at all times have no reason to suspect that total assets would no longer exceed total liabilities on a current balance sheet. This ASIC page contains useful general information on insolvency. Corporate governance This is a very useful page for Directors and Company officers. The page also includes a sub-link to cyber resilience and a very useful series of ASIC speeches in connection with Directors as gatekeepers. I will use this page to publish a future article on the role of Directors in setting the right culture. Disclaimer: Reproduction of statements made in this article by media outlets, whether in full or in part, is strictly prohibited without the written express consent of the author. The views, opinions, and positions expressed within this article are those solely of the […]
A positive compliance culture, one that truly embraces compliance, ensures that compliance serves its true purpose – to protect. If you begrudge compliance, it’s likely that you and your team see compliance as a bunch of rules that get in the way of doing business. Choosing a safe vehicle to protect your loved ones. When looking for a new or used car, you may consider buying one with some safety features. You may look for new cars that have a 5 star Australasian New Car Assessment Program (ANCAP) rating. Vehicle safety features can significantly improve safety. Technologies like autonomous emergency braking (AEB), blind-spot monitoring and lane-support systems can reduce the risk of a crash. Side curtain airbags can reduce the severity of an injury if a crash cannot be avoided. Going beyond this, we have a strict drivers licensing regime requiring knowledge and application of the road rules. Finally, we have a set of complicated road rules that govern road usage. In NSW alone these rules cover 353 clauses not including sub-clauses, amendments and regulations, Notwithstanding the complexity & cost (& at times frustrations of fines & lost points) of the governance around the use of a motor vehicle, we accept it. Why? because we know that this system of governance protects people & the community that we care about . There is a connection between the head and the heart. Compliance in general insurance is no different, compliance protects what matters. Compliance should not only engage your head, it should engage your heart. Protecting what matters, what you care about. Compliance: protecting what matters It is clear that compliance protects our customers and clients. However, it also protects our people, colleagues, your business, your partners and the wider community. Compliance protects against the risk of non-compliance, such as: Customers and clients: protecting against financial harm or detriment, anxiety, stress, mental health, frustration and time. The business: protecting against financial impact, loss of licence, regulatory enforcement action, reputational impact, lost management time. Your people and representatives: protecting against banning/disqualification, civil penalties, reputation, frustration, stress. Your business partners: protecting against reputational impact, enhanced regulatory scrutiny, financial impact. The community: protecting against systemic insurance industry failures, mistrust, failure to insure. How does compliance protect in general insurance? Imagine a fort: fortified protection through towers and walls designed to protect what matters. A fort provides safety to those within its walls. Compliance protects what matters: customers/clients, the business and its people, partners, stakeholders and the community. How? The four pillars (towers) of Compliance Compliance must have an operating rhythm, producing data indicating the adequacy of your compliance measures, evolving as your business grows and responding to external & internal change. Compliance is an ecosystem continually protecting what matters. The compliance operating rhythm is a structured, predictable way a business operates through its compliance measures incorporating: Governance & frameworks People & culture Procedures & process Systems & reporting Layers of protection Surrounding the fort are layers (walls) of protection. Compliance measures are your combination […]
ASIC previously examined insurers’ claims handling practices following the major floods of 2022 and found weaknesses across key areas. ASIC’s findings were consistent with other reviews, including the House of Representatives Standing Committee on Economics inquiry into insurers’ responses to the 2022 major floods. Recently, ASIC went back to assess how home insurers had addressed the areas of improvement identified in Report 768 Navigating the storm: ASIC’s review of home insurance claims (REP 768), published in August 2023. ASIC’s latest review has found that while insurers implemented programs to improve claims handling functions in recent years, and some progress has been made, there is still significant room for further improvement. ASIC identified that without further work, there is considerable risk of ongoing consumer harm, as well as breaches of Australian financial services (AFS) licensee obligations and the General Insurance Code of Practice (Code). Claims handling obligations Insurers holding an AFSL must meet the general obligations of financial service licensees under s912A(1) Corporations Act. These obligations include providing the claims handling & settling services efficiently, honestly and fairly. ASIC provides guidance on these obligations in INFO 253. ASIC can take enforcement action for a breach of obligations as an AFS Licensee. This includes cancelling or suspending the AFS Licence or imposing conditions on the licence as well as seeking civil penalties. Insurers who subscribe to the Code must comply with, and ensure their employees and Service Suppliers comply with the requirement to be honest, efficient, fair, transparent and timely in all dealings with customers (paragraph 21). Additional obligations arise under Parts 5 (Standards for Service Suppliers), 8 (Making a claim), 9 & 10 (customers experiencing vulnerability including financial hardship), 11 (Complaints), 12 (access to information) and 15 (Claims Investigation Standards). A breach of the Code can lead to sanctions being imposed by the Code Governance Committee with Significant breaches or serious misconduct being reported to ASIC. Insurers must act with the Utmost Good Faith under Section 13 of the Insurance Act With effect from 1 July 2025, CPS 230 applies to insurers (other than Lloyd’s underwriters). ‘Claims processing’ is deemed a critical operation under paragraph 36. Insurers must (1) take reasonable steps to minimise the likelihood and impact of disruptions to its critical operations, and; (2) identify and maintain a register of its material service providers (this includes those providing claim services) and manage the material risks associated with using these providers. What ASIC found ASIC’s review revealed that general insurers made progress to address the areas for improvement identified in their August 2023 report, which focused on better consumer communications, project management, handling of complaints, identification and treatment of vulnerable customers, and resourcing for dealing with claims and complaints. However, ASIC found there was inconsistent progress across the industry and still room for more work. ASIC have outlined high-level observations (see below). High level observations Oversight of independent experts needs work Insurers generally have well-documented quality assurance over their builders and repairers. This includes monitoring data on key performance […]
Misleading or deceptive regulatory obligations The Corporations Act prohibits engaging in conduct, in relation to a financial product or a financial service, that is misleading or deceptive or is likely to mislead or deceive (s1041H). Further, under the the ASIC Act, a person must not, in trade or commerce, engage in conduct in relation to financial services that is misleading or deceptive or is likely to mislead or deceive (s12DA). A breach of the misleading or deceptive conduct provisions is a Reportable Situation to ASIC (other than conduct impacting a single customer where no harm is caused). What is misleading or deceptive conduct? The key requirement is that the impugned conduct leads, or is likley to lead, a person into error. Advertising financial products and services (including insurance): Good practice guidance ASIC has developed good practice guidance (RG 234) to help promoters comply with their legal obligations to not make false or misleading statements or engage in misleading or deceptive conduct. The promoter will sometimes be the insurer, underwriting agency or broker but can also be a distributor or agent. ASIC’s guidance applies to advertising communicated through any medium in any form, including: magazines and newspapers radio and television; outdoor advertising, including billboards, signs at public venues, and transit advertising; the internet, including webpages, banner advertisements, video streaming (e.g. YouTube), and social networking and microblogging (e.g. LinkedIn); social media and internet discussion sites; mobile phone messages (e.g. SMS, MMS, text messages); product brochures and promotional fact sheets; direct mail (e.g. by post, facsimile or email); telemarketing activities and audio messages for telephone callers on hold; and presentations to groups of people, seminars and advertorials. Overview of Good practice guidance The following is extracted from RG 234, I have added general insurance context where relevant to do so. Returns, features, benefits and risks Advertisements for general insurance products should give a balanced message about the returns, features, benefits and risks associated with the product. Benefits should not be given undue prominence compared with risks. Warnings, disclaimers, qualifications and fine print Warnings, disclaimers and qualifications should not be inconsistent with other content in an advertisement, including any headline claims. Warnings, disclaimers and qualifications should have sufficient prominence to effectively convey key information to a reasonable member of the audience on first viewing the advertisement. Consumers should not need to go to another website (or other page of the website) or document (such as a PDS or TMD) to correct a misleading impression. Fees and costs Where a fee or cost is referred to in an advertisement, it should give a realistic impression of the overall level of fees and costs a consumer is likely to pay, including any indirect fees or costs. The premium, commission and government charges should be clearly identified. Comparisons Comparisons should only be made between products that have sufficiently similar features or, where an advertisement compares different products, the differences should be made clear in the advertisement. This is important for comaprison websites. Use of certain terms […]
Insurers, Underwriting Agencies (MGA), Insurance Claims Managers (TPA), Insurance Brokers and any other entity who holds an AFSL for general insurance has general obligations that must be complied with: A financial services licensee must: do all things necessary to ensure that the financial services covered by the licence are provided efficiently, honestly and fairly. have in place adequate arrangements for the management of conflicts of interest (also refer RG 181) comply with the conditions on the licence. The standard licence conditions are set out on PF 209 and include a ‘key person requirement condition’ if you are heavily dependent on the competence of one or two responsible managers (refer RG 105,52) comply with the financial services laws. These include Chapter 7 Corporations Act, ASIC Act Part 2 Div 2, Insurance Contracts Act, Insurance Act (including Prudential Standards & legislation specifically for APRA regulated insurers) and the Privacy Act. have available adequate resources (including financial (see RG 166) , technological (RG 104.97-100) and human resources (RG 104.93-96)) to provide the financial services covered by the licence and to carry out supervisory arrangements. This obligation does not apply to APRA regulated insurers. maintain the competence to provide those financial services (refer RG 105) ensure that its representatives are adequately trained, and are competent, to provide those financial services (RG 104.81-88) have an IDR system that meets the enforceable paragraphs of RG 271 and be a member of AFCA have adequate risk management systems (RG 104.59-66). This obligation does not apply to APRA regulated insurers. comply with regulation 7.6.04. This includes keeping training records, advising ASIC of certain matters & requirements in respect of authorised representatives. ASIC’s approach to the broad compliance obligations The broad compliance obligations are both stand-alone obligations and obligations that encompass the other general obligations. This means that: (a) if you fail to comply with one or more of the other general obligations, you are also likely to breach the broad compliance obligations; and (b) even though you may be complying with all of the other general obligations, you may still be in breach of the broad compliance obligations. This is because the broad compliance obligations are also stand-alone obligations (RG 104.54) Reportable situations to ASIC Obligations 1, 2, 5, 6, 7, 8, 9, 10 are civil penalty provisions. Therefore a breach of these obligations is a Reportable Situation to ASIC (see 912D(4)) all other breaches must be assessed under the criteria in s912D(5). Documenting your Compliance measures It is common for some licensees’ compliance measures to be integrated into their risk management systems. Compliance measures can be one of several controls you can use to address or mitigate risks to your business (including the risk of non-compliance with your obligations under the Corporations Act). (refer RG 104.48) Documentation helps you demonstrate whether or not you are complying with the general obligations. When you document your measures, ASIC expects this will include details of who is responsible, the timeframes involved and associated record keeping and reporting. (RG 104.26) […]
General insurance products are excluded from the conflicted remuneration obligations in respect of monetary or non-monetary benefits. However, from 9th July 2025, where personal advice is provided, or is likely to be provided, on general insurance products, the exclusion for monetary benefits only applies if the client’s informed consent to the monetary benefit has first been given. Refer: Corporations Act s963B(1)(a), s963BB, s963C(1)(a), and reg 7.7A.12G. Also refer ASIC RG 246 and INFO 292. what are the requirements? If you are a general insurance broker holding an AFS licence (or an [authorised] representative of a licensee) that receives monetary benefits (e.g. commissions) in connection with issuing or selling general insurance to a retail client while providing, or being likely to provide, personal advice to that client, you must: – obtain the client’s informed consent to receive the benefit before the insurance is issued or sold; – have the client’s written consent (or a copy of it), or a written record of any verbal consent that the client gave, and – as soon as practicable after the client provided informed consent, give the client a copy of the written consent, or a copy of the written record of the client’s verbal consent what does this mean in practice? The informed consent requirement applies to monetary benefits received by brokers from insurers (including underwriting agencies & Lloyds coverholders) given in connection with general insurance issued or sold after 9th July 2025 (including renewals after that date). if a broker is an authorised representative, the obligation applies to you in your capacity as an authorised representative. personal advice is financial product advice where the broker has considered one or more of the clients objectives, financial situation and needs or a reasonable person might expect the broker to have considered one or more of those matters. All other financial product advice is general advice. The informed consent requirement does not apply to monetary benefits given in connection with insurance issued or sold by AFS licensees and representatives if only general advice is provided or likely to be provided. If the situation involves both general advice and personal advice, the informed consent requirement applies to these benefits. The informed consent requirement does not apply to the giving of non-monetary benefits (e.g. education and training) to AFS licensees or representatives in connection with issuing or selling insurance. Note that AFSL general obligations ‘efficient, honest & fair’ and ‘conflicts of interest’ would apply to these arrangements especially if they are used to ‘disguise’ otherwise commission payments. This would also be misleading or deceptive conduct. If you are paid a monetary benefit without obtaining informed consent from your client, the monetary benefit you receive will breach the ban on conflicted remuneration. The consequences of breaching this ban could include a civil penalty, a banning order, or AFS licence suspension or cancellation. what must be provided to the client before they provide informed consent? Before a client can provide informed consent, you must disclose the following information to them: […]
‘Documentation helps you demonstrate whether or not you are complying with the general obligations.’ – ASIC RG 104.26 Insurers, underwriting agencies, TPAs, Lloyds coverholders, insurance brokers and claim service suppliers have a myriad of obligations to comply with. Compliance with your obligations, through your processes, procedures, systems and people are collectively known as your ‘compliance measures‘. Your compliance measures, together with your governance mechanisms, should work as an operating rhythm that manages your obligations in a systematic manner, incorporates changes, evolves as your business grows and responds to the external environment. The Risk & Compliance Manuals that I design and are tailored for my general insurance clients achieve this purpose, through the following: 1. Identifying the source of your obligations The source of your obligations are defined by: Who you are ? – an APRA regulated insurer holding an ASF Licence and who subscribes to the GI Code has different obligations to a NIBA insurance broker who is an authorised representative of a Licensee. Who do you act on behalf of? an underwriting agency or material service provider acting on behalf of an insurer or an insurance broker acting on behalf of a client? What do you do? – provide financial advice, issue general insurance products, provide a claims handling service or are a claims service supplier to an APRA regulated insurer How do you do it? – do you distribute direct or through brokers, do you sell through human interaction or automated processes, do you provide claims under your licence or through a TPA? Who are your clients? – retail or wholesale clients , consumer insurance contract or other insurance contracts. standard form contracts 2. Capture your obligations For my smaller-medium sized clients I capture obligations within their Risk & Compliace Manual, providing a single source document. Larger clients usually have a stand-alone obligations register. The manual or register should also include the source of the obligations (e.g., Section 912A(1)(a) Corporations Act or paragraph 21 GI Code of Practice), this enables the reader to deep-dive into the actual obligation when required. 3. Assign key controls This is the heart of ensuring your compliance measures are adequate. Key control(s) are assigned to each obligation, so that the obligation is managed within risk appetite. The focus of the Board, Senior Managers and Risk & Compliance Committee now shifts from the numerous obligations to a suite of more manageable key controls. 4. Test your key controls A key control that is not periodically tested is no control. Testing should incorporate (1) design effectiveness – is it fit for purpose? and (2) operational effectiveness – is it operating as intended? Gaps must be identified, reported and closed out in a timely manner. The gaps must be assessed for regulatory or Code breaches. You must have a control testing program. 5. Monitoring and reviewing your compliance measures Your compliance measures must be monitored on an ongoing basis. An effective risk & compliance operating rhythm generates data – incidents, complaints, control testing, file reviews, attestations, […]
In its preamble, The Insurance Contracts Act is, an Act to reform and modernise the law relating to certain contracts of insurance so that a fair balance is struck between the interests of insurers, insureds and other members of the public and so that the provisions included in such contracts, and the practices of insurers in relation to such contracts, operate fairly, and for related purposes The Act provides the foundation of insurance: the Utmost Good Faith, and for consumer insurance contracts ‘the insureds duty to take reasonable care not to make a misrepresentation.’ The powers that ASIC has under the insurance Contracts Act add significant weight to ASIC’s enforcement tool-kit and their already far-reaching enforcement powers under the ASIC Act & Corporations Act. ASIC responsible for general administration of Act The Insurance Contracts Act (Act) is one of several financial service laws referenced in section 912A(1) Corporations Act. AFS Licensees must: comply with the financial services laws (s912A(1)(c)); and take reasonable steps to ensure that its representatives comply with the financial services laws (s912A(1)(ca)) Powers of the ASIC (section 11B) ASIC’s powers are set out in Part IA of the Act. ASIC has the general administration of the Act (s11A) ASIC has power to do all things that are necessary or convenient to be done in connection with the administration of the Act and, without limiting the generality of that power, has power: (a) to promote the development of facilities for handling inquiries in relation to insurance matters; (b) to monitor complaints in relation to insurance matters (note that this is in addition to Corporations Act and enforceable paragraphs of RG 271); (c) to liaise generally with other persons or bodies having a responsibility to deal with inquiries, complaints and disputes concerning insurance matters (such as Code Governance Committee and AFCA); (d) to review documents (including documents promoting particular kinds of insurance cover) issued by insurers (such as PDS, TMD, key fact sheets etc) and given to ASIC in compliance with section 11C; (e) to review particulars, statistics and documents given to ASIC in compliance with section 11D; and (f) to monitor legal judgments, industry trends and the development of community expectations that are, or are likely to be, of relevance to the efficient operation of the Act; and (g) to promote the education of the insurance industry, the legal profession and consumers as to the objectives and requirements of the Act. Supervisory powers—ASIC may obtain insurance documents (section 11C) 1) ASIC may, for any purpose connected with the general administration of the Act , require an insurer within 30 days (following ASICs written notice) provide: (a) documents specified in the notice relating to insurance cover provided, or proposed to be provided, by the insurer; or (b) documents relating to insurance cover of a kind specified in the notice provided, or proposed to be provided, by the insurer. Non compliance without reasonable excuse is a strict liability offence. Supervisory powers—ASIC may review administrative arrangements (section 11D) ASIC may, require an insurer to give to ASIC, within 30 days of receipt of […]
As Tropical Cyclone Alfred approaches Queensland & Northern NSW, it is appropriate for general insurers, underwriting agencies, brokers, insurance claim managers and service suppliers to consider how the GI Code of Practce (Code) responds to Catastrophes. Firstly, for consumers the ICA has advised, where possible, to prepare, residents should: Clear their property and gutters from loose material that possibly cause injury or damage during extreme winds or heavy rain, including moving outdoor furniture and pool accessories Secure boats or vehicles and move their car under cover Place important documents and valuables in plastic bags or other waterproof containers and put in a safe place Check your emergency kit is ready and nearby Insurance disaster response specialists are on standby, and the Insurance Council is liaising with the State Government, Queensland Reconstruction Authority and the National Emergency Management Agency in preparation. Code overarching obligations Insurers & their Distributors and Service Suppliers will be honest, efficient, fair, transparent and timely in dealings with customers. This is the Code’s overarching obligation to consumers and continues during Catastrophes (paragraph 21) Fast-tracking urgent claims Where an event (for example, a natural disaster) caused an insured to be in urgent financial need of the benefits they are entitled to under the policy, insurers we will do either or both of the following: fast-track both the insurers assessment of the claim and the process followed to make a decision about the claim; pay an advance amount to help ease an urgent financial need — insurers will do this within 5 Business Days after demonstration of an urgent financial need. If the insured is not happy with the insurers response to a request about urgent financial need, then the insurer must tell the insured about their Complaints process. (paragraphs 64-66) Claims for total loss When an insured has suffered a total loss, the insurer and Service Suppliers will treat the claim with sensitivity. If the claim has been accepted for a total loss under a home building and home contents insurance policy and the insured is unable to provide proof of ownership for the relevant insured property because it was lost in or damaged by the insured event (and ownership is clear) insurers will not: require proof of ownership; or require a list of insured property that was lost or damaged. (paragraph 80) Responding to Catastrophes Insurers will respond to Catastrophes efficiently, professionally, practically and compassionately. Insurers will co-operate and work with the Insurance Council of Australia on industry coordination and communications under the Insurance Council of Australia’s industry Catastrophe coordination arrangements. If an insured has a property claim resulting from a Catastrophe and the insurer has finalised the claim within 1 month after the Catastrophe event causing the loss, the insured can request a review of the claim if they think that assessment of the loss was not complete or accurate, even though a release was signed. Insureds have up to 12 months from the date of finalisation of the claim to ask for a review of […]
The key to successfully managing your compliance obligations is to ensure that all your people are on the same page – this requires a consistent, documented approach to compliance & training. Your people includes employees, authorised representatives, distributors and service providers acting on your behalf. General Insurance Obligations AFS Licensees must ensure that its representatives: comply with the financial services laws; & adequately trained (including by complying with the CPD provisions), and are competent, to provide those financial services Subscribers to the GI Code of Practice must: ensure Employees and Distributors to receive appropriate education and training; that claim Service Suppliers and their employees are qualified by education, training or experience Insurance brokers under the Brokers Code of Practice must: ensure all of their employees, agents and representatives receive appropriate education and training to provide their services competently; and receive training on the Code at least once every year. It is obvious from the above that the training and competency obligations are specific and must be documented to demonstrate evidence of compliance. Compliance training To often I observe that organisations simply mandate that their employees and others acting on their behalf must undertake xx number of hours each year or achieve 20/25 CPD or CIP points. This requirement, of itself, does not comply with your Code or financial service laws obligations. The training must be relevant & cover financial service laws, Industry Codes and your general insurance products and services. Key principles The training must be conducted during induction and at least annually. That is there is a regular, systematic approach to training The training must cover the financial service laws, the relevant Industry Code and the products and services being provided by your business Training must be recorded in a register (for Licensees, this is a regulatory requirement Responsible Managers should undertake specific training designed for responsible managers Compliance measures should be documented in a tailored, fit-for-purpose & easy-to-read manual and compliment the training. (Contact me for assistance) Your people need constant reminding about raising incidents & complaints through FAQs, standing meeting agenda items, attestations etc. This ensures training is put into practice Use breach investigations and quality assurance activities as an oportunity to provide refresher training when gaps are identified The training should use business case studies and scenarios and test understanding