The Australian insurance industry is undergoing major changes, but the Insurance Council of Australia (ICA) has confirmed that insurance companies have already made changes to their systems and processes ahead of the implementation of a myriad of reforms commencing today.
The regulatory changes implemented today are part of the Federal Government's response to the Financial Services Royal Commission's (Royal Commission) report and recommendations to improve customer outcomes in the industry.
The regulatory changes include:
- Deferred sales model for add-on insurance;
- Anti-Hawking restrictions;
- Product design and distribution obligations;
- Avoiding misrepresentation;
- Breach reporting obligations;
- Unfair contract terms; and
- Claims handling as a financial service, which will not come into effect until January 01, 2022.
Since the Royal Commission's report and recommendations, the ICA and its members have worked closely with stakeholders and the government to ensure the reforms' intentions are realised.
The representative body has also advocated for a regulatory regime allowing insurers to deliver services that meet consumers' expectations without unintended consequences – facilitating collaboration among the insurance industry, consumer groups, and regulators.
“The Insurance Council supports the intention of these once-in-a-generation regulatory reforms to improve consumer outcomes,” said ICA CEO Andrew Hall. “Insurers have worked hard to ensure the necessary changes to processes have been made and staff are appropriately trained.
“Pleasingly, the government and its agencies have taken on board much of our feedback and have been open to changes that avoid unintended consequences from aspects of the new regulatory regime.”
The ICA stated that it will continue to work closely with its members in monitoring the implementation of the new regulations and stand ready to engage with the Australian Securities and Investments Commission (ASIC), Australian Prudential Regulation Authority (APRA), and Treasury should any issues arise.
Moreover, the General Insurance Code of Practice (Code) will be updated from October 05, 2021, to align with ASIC's Regulatory Guide on internal dispute resolution. Updates include:
- A reduction from 45 to 30 days to resolve a complaint;
- an updated definition of a complaint; and
- a new commitment to improved customer awareness through information on Code subscriber websites about the availability of financial hardship support.
“We look forward to continuing that dialogue as the new arrangements are bedded down and better understood in practice,” Hall said. “At the same time, we welcome updates to the Code of Practice to further strengthen provisions and information for consumers.”