NIBA CEO, Dallas Booth has urged action on Design and Distribution Obligations (DDO) legislation
National Insurance Brokers Association (NIBA) CEO, Dallas Booth has urged principal members as well as operations and compliance managers at insurance broking firms to ensure they consult a legal adviser on the Design and Distribution Obligations (DDO) legislation.
Booth said, “This legislation to implement new obligations on insurers and distributors of insurance products has already been passed by the Federal Parliament. The Australian Securities and Investment Commission (ASIC) has indicated that commencement of the new rules has been put back to October 2021. This is welcome, but there is absolutely no room for complacency, the new rules will apply to every product that currently has a product disclosure statement (PDS) attached to it.”
His guidance is that the crucial aspect for insurance brokers to focus on at the present time relates to those firms who use “broker wordings”, or their own schemes – where the broker has been involved in the design of the policy and the development of the cover that is provided.
In these cases, the broker will need to work closely with the insurer/underwriter to determine how the DDO will operate in respect of those policies, who will be responsible for the preparation of the target market determination, and how the product review obligations will be implemented. Booth said, “You will most likely need to get legal support for this process, in order to ensure you are meeting the legislative obligations. We continue to urge all members with broker wordings to look closely into these matters now.”
Booth also confirmed that NIBA is continuing to work with the ICA to develop an understanding of how the legislation will work, “We are also aware that several insurers are making contact with brokers to discuss these matters directly. It will be unfortunate if insurers take a range of approaches to these matters.”
He added that his representation column in the NIBA magazine Insurance Adviser is chock full of important updates and insurance brokers should give it a good read. “Our EDMs to our member principals often include important notes on legislative topics provided by our legal adviser, Mark Radford. It is important that brokers give these a good read and know that NIBA is working behind the scenes to ensure that they are on top of any regulatory direction.”