Revealed: Levy approximations for Australian insurance industry

Revealed: Levy approximations for Australian insurance industry | Insurance Business

Revealed: Levy approximations for Australian insurance industry

The Australian Securities & Investments Commission (ASIC) has published its draft Cost Recovery Implementation Statement (CRIS), detailing not only ASIC’s actual regulatory costs for 2018-19 but also its cost estimates for 2019-20. The 208-page document features sectors such as deposit taking and credit, as well as investment management, but here we’ll zero in on the 2019-20 approximations for the insurance industry.

Stressing that the figures serve only as a guide, ASIC said their estimated costs are made public to give an indication of what levy costs a certain sector can expect. Final levies to be paid will be based on actual costs for the year, which will be published in December and invoiced in January 2021.

For the insurance industry, the CRIS breaks down the estimates into three categories: insurance product providers (both life and general), insurance product distributors such as brokers, and risk management product providers. In the document, ASIC outlined how the forecast costs have been allocated between each subsector and the corresponding indicative levies.

According to the draft CRIS – feedback on which can be submitted by stakeholders until July 24 – the estimated total costs to be recovered by levy from insurance product providers is $14.373 million; insurance product distributors, $2.496 million; and risk management product providers, $0.809 million.

As for ASIC’s priorities for the insurance industry, the regulator noted: “In 2019–20, we will focus on supporting the development and implementation of insurance law reforms that stemmed from the Royal Commission. These will significantly broaden ASIC’s mandate and address limitations of the law to support better consumer outcomes.

“We will review specific product segments and examine the conduct and practices within the industry to gain deeper insight into real and potential structural and behavioural issues. We will take regulatory and enforcement actions where necessary, including the use of our product intervention power to address undesirable practices in the sale and distribution of insurance products.”