ASIC has updated its regulatory guidance on managing conflicts of interest for Australian financial services businesses. One of the general obligations of an AFS Licensee is to have in place adequate arrangements for the management of conflicts of interest that arise from the licensees financial services (or from the services provided by the authorised representative of the licensee). Section 912A(1)(aa) Corporations Act. This obligation is a civil penalty provision. Action required Licensees should review their arrangements (and those of their authorised representatives) for identifying, raising and managing conflicts of interest, against the updated RG 181, specifically update Risk & Compliance Manual and/or Conflicts of Interest Policy; update conflicts of interest training modules; and update monthly attestations. It would be timely for Licensees to reiterate Conflicts of Interests obligations with staff and ARs based on the updated RG 181 and to submit any fresh conflict of interest declarations using the Appendix to RG 181. The Appendix provides a catalogue that outlines some key legal obligations and information relevant to conflicts management that may apply to an AFS licensee, representative, or AFS licence applicant. Key updates in the revised RG 181 include: how the law applies to conflicts of interest, including the scope of the conflicts management obligation and links to other related obligations the types of conflicts AFS licensees should identify and manage the need for robust, tailored arrangements to manage conflicts practical steps for effective conflict management, and a non-exhaustive ‘catalogue’ of related legal obligations and information. Scope of the obligation The conflicts management obligation is broad and is intended to apply widely—it is not limited in its application. It applies to all conflicts of interest other than those wholly outside (i.e. completely separate to) the financial services business of you or your representative. It applies to conflicts of interest that arise within the financial services business. It also applies to conflicts that arise between something within the financial services business and something outside it, particularly where the relationship, interest or activity may affect (or reasonably appear to affect) how financial services are provided by the business. For example, an employee prioritising their competing personal or financial interest outside the business may affect how they provide financial services within the business, as well as the quality of the services they provide. What is a conflict of interest? A conflict of interest can arise where there are competing financial interests, personal interests, business or related party interests—whether direct or indirect—or competing loyalties and obligations. In some circumstances, a combination of these may give rise to a conflict. You should take a ‘common-sense’ and objective approach to determining if there is a conflict of interest. Whether there is a conflict of interest will ultimately turn on the facts and circumstances of a situation. Conflicts of interest can be: (a) actual—where a conflict currently exists that could sway your judgement or actions (or those of your representatives); and (b) potential—where circumstances do not currently give rise to an actual conflict but could reasonably […]

Key areas of focus for 2026 AFCA Claims handling Approach – consultation on AFCA’s Approach to general insurance claims handling has closed. The new Approach is expected to be released shortly. Insurers have key obligations under the Insurance Contracts Act 1984 (Cth), including the duty of utmost good faith, which requires them to handle insurance claims fairly, transparently, and efficiently. This Approach provides information about how AFCA considers various types of complaints relating to the handling of general insurance claims, against an insurer’s legal obligations and has regard to industry standards. Cash Settlements. In ASIC’s Corporate Plan 2025-26 – We will review general insurers’ use of cash settlements to better understand the practices and disclosures surrounding the offers being made and to assess whether there are risks of consumer harm. CAsh Settlements were also called out as an area of 2026 focus by the Code Governance Committee and in AFCA’s [new] Claims Handling Approach. Industry use of external experts. has highlighted improvements in how insurers oversee and engage external experts, with better measures to strengthen accountability and quality assurance. The CGC, in its Oversight of external experts: follow up 8 December 2025 has identified areas of ongoing work. Pricing promises and pricing transparency. ASIC Corporate Plan 2025-26 We will examine the accuracy and transparency of general insurers’ disclosures about premiums and work to better understand consumer experiences. Complaints (IDR). In 2024, ASIC reviewed 11 general insurers to understand how they are supporting customers who make a complaint. ASIC’s Report 802 highlighted a failure to identify 1 in 6 complaints and a lack of identifying systemic issues. ASIC has also indicated that it will be moving to publishing IDR data at a firm-level (refer CP 383). The General Insurance Code Governance Committee highlighted complaints handling as a main priority for 2025-26. The Insurance Brokers Code Compliance Committee in their Annual Report 2024-25 found 42% of brokers reported no breaches or complaints Incident and Breach Reporting. ASIC’s review of reportable situations (4th December 2024) revealed a number of poor practices among licensees including deficiencies in Licensee’s incident mangement. The Insurance Brokers Code Compliance Committee in their Annual Report 2024-25 found 42% of brokers reported no breaches or complaints Privacy changes were introduced in December 2024 with automated-decision making to be regulated by December 2026. The OAIC launched a new Notifiable Data Breaches (NDB) statistics dashboard 4 November 2025. Additional changes are contemplated to the Privacy Act. CPS 230 – operational resilience and BCPs. The new prudential standard CPS 230 introduces strict requirements for insurers to strengthen operational resilience, meaning they must effectively manage operational risks and ensure continuity of critical functions during and after a disruption event and oversee “material service providers” such as claims processing and underwriting agencies. APRA will conduct a review of the large insurers during 2026 with learnings shared for all other insurers and there material servcie providers. GI Code of Practice. The insurance Council of Australia and insurers are moving to the next stage of the development […]

AFCA have published its updated Approach to family violence and Approach to financial abuse of older people following a comprehensive consultation process. AFCA have: expanded and refreshed the Approach to family violence, which will replace AFCA’s existing Approach to joint accounts and family violence revised and updated the Approach to financial abuse of older people, which will replace the superseded Approach to financial elder abuse. I have extracted the parts of the Approaches relevant to General Insurance however the full Approaches should be considered and can be accessed here. The AFCA Approach to family violence What is family violence? The Family Law Act 1975 (Cth) defines family violence as: “…violent, threatening or other behaviour by a person that coerces or controls a member of the person’s family (the family member),or causes the family member to be fearful.” Family violence can have serious and lasting effects on a person’s physical, psychological and financial wellbeing. These impacts may compound over many years. Family violence impact does not necessarily end when the relationship does. In some cases, it can begin or escalate after the relationship has ended. Family violence refers to both intimate partner violence and violence between family members. This includes (but is not limited to): physical, psychological, sexual and emotional abuse coercive control financial abuse parental or elder abuse General insurance Family violence in the misuse of insurance products is a growing risk. Insurance policies can be exploited to perpetrate abuse by changing or cancelling policies, changing beneficiaries, restricting access to information, interfering with the claims process, or preventing victim-survivors from obtaining a payout. Warning signs of potential family violence and financial abuse There are warning signs that a customer may be experiencing family violence and/or financial abuse specific to insurance products. These may include when one policyholder may: not understand, or is not aware, that: > cover has been taken out in their name or covering their property > they have been removed from a policy or the policy has been cancelled by a joint policyholder have concerns about protecting their personal privacy or safety or the security of their policies be reluctant to involve the other joint policyholder when making changes to the policy, making a claim or seeking hardship assistance. Warning signs that a policyholder may be a perpetrator of family violence include that they: ask questions about a joint policyholder’s behaviour or activities request to remove the other joint policyholder from a policy or claim are reluctant to involve the other joint policyholder when making changes to the policy, making a claim or seeking hardship assistance. Common issues that may arise In the context of insurance, issues that may arise with jointly held policies in situations involving family violence, include: cancellation of the policy by one policyholder payment of benefits under a jointly held policy disadvantage to innocent co-insured by a perpetrator’s failure to disclose perpetrators forcing victim-survivors to pay an excess following an accident policies that may exclude damage to property by the perpetrator of family […]

The true purpose of Compliance What is your compliance narrative? Is it about rules, regulations and laws? A legalistic approach to compliance does not engage your people and projects compliance as a series of task and activities that must be undertaken – hardly inspiring or motivational, with the outcome that compliance is often reactive in nature. How do you change the compliance narrative so that it is about people and caring, driving a proactive approach to compliance? The true purpose of compliance is to protect. The question becomes – protect who and from what? Your firm’s response to this fundamental question is important. People are motivated to act by caring, and its what we care about, that we want to protect. The protect analogy Think about driving a car. You need a drivers licence to drive a motor vehicle on a public road. This licensing process requires you to gain knowledge and skills to operate a motor vehicle in accordance with the road rules. Why? to protect yourself, people you care about (as your passengers), other road users and the community from the cost of motor vehcile accidents – fatalities, injuries and property damage and consequential social costs. Similarily, in order to conduct a general insurance business in Australia you need to be authorised by APRA and to provide a financial service (which includes general insurance) you need to be licensed by ASIC, or be a representative of a licensee. Like a drivers licence, you need to demonstrate to APRA and ASIC the knowledge, skills, and experience in general insurance with the approriate capital requirements and human, financial and IT resources with people who meet standards of honesty, ethics and integrity. Why, to protect what matters, and who you care about. Let’s explore this further. Who does compliance protect? Compliance, in a general insurance context, protects: our customers, clients and consumers from the risk of financial harm and detriment and consequential impacts on their life, business and assets (due to issues such as availability and affordability; partial or total declined claims; underinsurance, claim delays etc); our people (this includes staff, external representatives, material service providers and anyone involved in the insurance sales & claims supply chain) from the risk of being banned or disqualified, individual fines & penalties, damage to their reputation and asscoaited mental health issues and impacts to the enjoyment of their life; our business – the risk of fines & penalties, loss of licence, enforcement action, lost management time, loss of business, reputational impacts and class actions including shareholder actions for ASX listed entities; our business partners such as insurers, MGAs, TPAs, service suppliers, authorised representatives, referrers, distributors, and material service providers from the risk of financial and reputational harm, regulatory enforcement action, loss of business partner and associated loss of business; and the community, arising from systemic failures and mistrust in the general insurance industry. What happens when we care? Caring motivates people to take action, and to perform tasks that make a positive difference. This […]

The following are extracted from remarks by ASIC Commissioner Alan Kirkland at the Insurance Council of Australia Annual Conference on 10 October 2025. I have grouped the remarks under various headings for ease of reference. The full speech may be accessed here. Claims handling – 2022 floods It’s hard to forget those who let you down when you’ve had a hard time – and that was unfortunately the experience of many Australians in the aftermath of the 2022 floods. “Some people, who turned to their insurer in their darkest hour after paying premiums for years, felt that they became engaged in an adversarial situation with a company meant to be on their side.”[9] That quote is from the House of Representatives Standing Committee on Economics report into claims handling failures after the 2022 floods, which was handed down almost a year ago. It’s fair to say that there remains a significant trust gap to be addressed following this report. Reputation data from RepTrak[10] and Roy Morgan[11] suggests that insurance is among Australia’s most distrusted industries – and you only need to look at the testimony of individuals impacted to understand why. David Norris, whose family owned the Central Hotel in Eugowra, told the inquiry after more than 60 years with their insurer it was apparent that “loyalty only goes one way[12]. This is the challenge that must be addressed by you as you try to “pitch your tent” in the middle of these storms – showing people like David that loyalty is a two-way street. Areas of improvement in claims handling As insurers though, you are in the business of recovery. You know that rebuilding doesn’t happen overnight. It takes continual effort and care. And we know from our latest review that some of you are putting in the work and starting to see some green shoots of recovery as a result of that work. As noted recently by AFCA[13], the industry has made progress on reducing historically high complaint numbers, which should be commended. And we have also observed some promising signs in our recent follow-up on Report 768 – which of course was the report that examined claims handling practices following the 2022 floods[14]. When that report was published, we found that poor communications, poor resourcing, and poor treatment of vulnerable customers were endemic across the insurance industry. But it is clear that a lot of work has happened in the past two years in response to those findings. For example, every insurer we looked at this time around had established a program to improve their approach to claims handling. Most had introduced a single point of contact for claims, so customers didn’t have to tell their stories over and over again. Some had gotten smarter about how they used their data to identify and support vulnerable customers, before and after major events. And a few went beyond this – towards truly consumer-centric practices. For example, we’ve seen some insurers appoint a dedicated consumer advocate to be a […]

Last month I attended the AILA 2025 National Conference in Melbourne. One of the highlights was the regulators panel featuring: Jane Magill Executive Director General Insurance & Banking, APRA Peter Soros Executive Director, Regulation & Supervision, ASIC David Locke CEO, AFCA Chair Alexandra Hordern General Manager, Regulatory & Consumer Policy, ICA (Insurance Council of Australia) General insurance – areas of increased regulatory oversight The following areas were identified as subject to regulatory oversight during 2026: it was noted the increased complaints for motor vehicle insurance, this will be a focus for ASIC claims handling is improving however areas such as cash settlements will be a focus risk culture including how this permeates throughout the organisation feedback on CPS 230 based on reviews of larger insurers the use of AI however both ASIC and APRA consider that the existing regulatory regime is sufficient to manage the risks and are continuing to observe this space. A human should be involved in any AI decision-making process. APRA will be undertaking a narrow review of larger entities to test that principle based Prudential Standards 220, 230 & 234 are adequate to manage the risk of AI the use of AI by complainants as part of the IDR and EDR was observed and is being considered by AFCA (and is consistent with what I’m being told by my clients) pricing; the expectation is for transparency, and insurers to recognise efforts by insureds to improve their own risk sustainability reporting requirements The role of the regulator David Locke provided the following view on the role of the regulator which I have produced below with David’s permission: As a regulator your role is to clearly spell out where the red and yellow flags are on the beach and make it very easy for the public (and financial firms) to swim between the flags. There will always be some people who drift or accidentally swim just outside them and you blow your whistle and use the lightest regulatory tools necessary to get them to swim back in safe water. You then focus the majority of your compliance resources on the idiots jumping off the rocks at the end of the beach. You want to prosecute them to deter others from doing so, and in some cases want them permanently off the beach. David’s analogy strongly resonates with my ‘Compliance protects what matters‘ theme. A company’s compliance arrangements can serve a similar purpose of keeping their people and other representatives swimming safely between the flags (that is: conducting general insurance business efficiently, honestly, fairly, transparently and timely) by adopting the following compliance operating rhythm: the documented compliance process and procedures, training and IT systems provides a safe place to conduct business protecting the business, its people, its customers and cliients and its business partners; the firm’s people acting as ‘an early warning system’ to quickly identify and raise incidents and complaints; an effective monitoring program; and a culture of wanting to do the right thing. Disclaimer: Reproduction of statements […]

Underwriting Agencies generally require an APRA-regulated insurer as a partner to provide general insurance products in Australia. The Underwriting Agency typically has delegated binding authority from an insurer (see section 916E Corporations Act). In this instance, the Agency is acting on behalf of the insurer. In other arrangements, such as an open-market placement, it’s likely that the agency is acting on behalf of the insured (commonly referred to as wholesale broking) and would require the relevant authorisation under their AFS Licence. It is necessary for an Underwriting Agency to ensure that the insurer is authorised by APRA to carry on general insurance business in Australia. Who is an insurer and what authorisation does an insurer require to carry on general insurance business in Australia? Under the Insurance Act 1973, it is an offence to conduct insurance business in Australia without the proper authority. If your business intends to conduct any business that can be classed as insurance business, you need a licence from APRA giving you the authority to conduct insurance business in Australia. Part 3 of the Insurance Act defines ‘insurance business’ as the business of undertaking liability by way of insurance (including reinsurance), in respect of any loss or damage. It includes liability to pay damages or compensation, contingent upon the happening of a specified event, and any business incidental to insurance business as so defined. There are some exclusions to the definition of insurance business, such as life insurance (covered by the Life Insurance Act 1995) and health insurance (covered by the Private Health Insurance Act 2007). The Insurance Act only allows corporations or Lloyd’s underwriters to carry out insurance business in Australia, which means APRA cannot consider applications from partnerships or unincorporated entities. APRA expects all applicants to be able to comply with all of its prudential requirements, as set out in the Insurance Act and prudential standards, from the commencement of insurance business in Australia and continuously thereafter. Requirements APRA will consider the following matters in the application: ownership governance including board composition and FAR Capital and Assets in Australia including minimum capital requirements Risk management framework Compliance Reinsurance management Informations security and accounting systems Intra-group transactions and arrangements General insurers authorisation – Section 12 A general insurer, including a foreign general insurer, is authorised under section 12 to carry on general insurance business in Australia. The obligation to comply with APRA Prudential Standards applies to general insurers authorised under section 12. Lloyds Underwriters – Section 93 Part VII, section 93 of the Insurance Act authorises Lloyd’s Underwriters to write Australian insurance business. Sections 65 to 73 of the Act provide for special Australian policyholder protection provisions associated with Lloyd’s. At all times, Lloyd’s must ensure that security trust fund arrangements, and ancillary or incidental arrangements, in accordance with Lloyd’s security trust fund instrument No. 2 of 2017 are in existence. Unauthorised foreign insurers Certain insurance business is an exemption under the Insurance Act (subsection 3A(1)) Insurance Regulation Section 8 provides that where insurance is […]