Insurance brokers, Underwriting Agencies, TPAs, Claimant Intermediaries and Service Providers must take care in the use of certain words that are either restricted or their use may lead to misleading or deceptive conduct.
Use of words “insurance” and “insurer”
Section 114 Insurance Act places restrictions on the use of the words ‘insurer’ and ‘insurance’.
This is relevant for discretionary mutual funds and warranties.
Use of the word “insurance”
- A person commits an offence if the person carries on a business or is proposing to carry on a business; and the person uses the word insurance to describe (expressly or by implication) a product or service that the person supplies, or proposes to supply, in the course of carrying on the business; and
- the product or service is not insurance; and
- it is likely in all the circumstances (including the use of the word insurance ) that the product or service could be mistakenly believed to be insurance.
Use of the word ‘insurer’
Use of the word “insurer”
- A person commits an offence if the person carries on a business or is proposing to carry on a business; and the person uses the wordinsurer to describe (expressly or by implication) the person in connection with a product or service that the person supplies, or proposes to supply, in the course of carrying on the business; and either:
- the product or service is not insurance; or
- the person would breach a requirement mentioned in subsection (3) [need to be authorised to carry on insurance business] if the person supplied the product or service in the course of carrying on the business; and
- in a case where the product or service is not insurance–it is likely in all the circumstances (including the use of the wordinsurer ) that the product or service could be mistakenly believed to be insurance.
Insurance brokers receiving commissions, remuneration or benefits from insurer or underwriting agency
Brokers who receive commissions, remuneration or benefits from an insurer or underwriting agency are not permitted to use the word independent , impartial or unbiased. Refer Section 923A Corporations Act
Insurance brokers – restricted terms
A person may only use the following terms if authorised by a condition on their AFS Licence: insurance broker, insurance broking or general insurance broker (Section 923B Corporations Act)
Restricted terms in Advertising financial products and services
Care should be taken when using certain terms and phrases in an advertisement, particularly where the way those terms and phrases are used is not consistent with the ordinary meaning commonly recognised by consumers (e.g. ‘free’, ‘secure’ and ‘guaranteed’). RG 234.91
Inappropriately using terms and phrases can:
- create expectations that cannot be met;
- indicate a certain level of security that does not exist; and
- indicate different levels of protection and different levels of risk.
The use of such terms may lead to misleading or deceptive conduct.
Use of technical language and industry jargon in advertising
Industry concepts or jargon may not be well understood by many consumers and should be avoided unless the advertisement is unlikely to be seen by any consumers outside a defined group and the promoter can be confident that those consumers are familiar with the subject matter. It should not be assumed that consumers will understand concepts used within a particular industry or even understand the products themselves. (RG 234.94)
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