Insurance Reforms Continue: A note from Dallas Booth

As the industry slows down for the Christmas and New Year holidays, NIBA will continue to examine reform proposals from the Federal Government arising out of the Royal Commission.

Treasury is currently consulting on draft legislation to make claims handling a financial service. As proposed, anyone making claims decisions on behalf of an insurance company will have to hold an Australian Financial Services Licence, or be an authorised representative of an AFS licence holder.

NIBA is considering the detail of these proposals, and will be discussing the matter with Treasury on 19 December 2019.

Proposals to apply the unfair contract terms legislation to insurance contracts is currently in the Federal Parliament, and will be debated when Parliament resumes in 2020. Separately, Treasury is consulting on further possible reforms to the unfair contract terms framework, and NIBA will be closely examining these matters early in the new year.

The possible reforms will apply to a wide variety of contracts, and could well have an impact on insurance contracts, depending on the final approach adopted by the Government.

NIBA has been meeting with the Insurance Council of Australia and representatives of insurance companies to discuss the implementation of Design and Distribution Obligations. These laws are already in place, and will take effect in April 2021.

The new laws apply right across all financial services, and our goal is to work out how best to apply the laws to general insurance. The new laws require insurance companies to develop a Target Market Determination for each of their domestic insurance policies, and distributors (which include insurance brokers) will be required to distribute the products only in accordance with the insurer’s TMD.

As with all of these matters, the devil is always in the detail, and NIBA will be working on these and a number of other reform proposals during 2020.

We would like to take this opportunity to wish all our readers a very Happy Christmas. We hope everyone can get to have a good break in the coming weeks, and charge the batteries for the challenges of the new year.  We hope 2020 is successful and prosperous for all.

NIBA’s office will close on Friday 20 December 2019, and will re-open on Thursday 2 January 2020.