The Financial Sector Reform Regulations 2021 have been issued and include a broad carve out for brokers
The Financial Sector Reform (Hayne Royal Commission Response) (Claimant Intermediaries) Regulations 2021have been issued and include a broad carve out for intermediaries known as – Insurance Broker – Claimant Intermediary exemption.
In its previous advice to members in relation to the claims handing and settling changes, National Insurance Brokers Association (NIBA) advised that it was liaising with Treasury in relation to the broadening of the insurance broker exemption as it related to the category of persons who would be caught by the Act in relation to claims handling and settling services when acting as a “claimant intermediary”.
A “claimant intermediary” is defined as a person who carries on a business of representing an insured under an insurance contract for a reward (see section 761CAA of the Corporations Act 2001).
NIBA CEO Dallas Booth has advised that NIBA has been successful in this endeavour.
What this means practically
The end result is insurance brokers will only be caught by the new claims handling and settling services regime if acting on behalf of insurers in providing claims handling and settling services. NIBA’s previous advices on this topic carry more information about this.
Those insurance brokers acting for insurers need to identify if and when they may be providing a claims handling and settlement service on behalf of insurers and generally determine whether:
(i) they need to vary their AFSL for this service;
(ii) they fall within one of the relevant exemptions; and
(iii) they need to act as an authorised representation of a licensee or in another representative capacity.
Those seeking to apply for a claims handling and settling services authorisation will need to refer to ASIC’s AFS Licensing Kit (Regulatory Guides 1,2 and 3) and sample AFS eLicensing application. They also must complete the C12 Proof: Insurance Claims Handling and Settling Service Statement in Regulatory Guide 3.
Booth also urged brokers to pay heed to the ASIC note indicating that they would like applications to vary AFS licences to include a claims handling authority to be made to ASIC by 7 May 2021. You can view our previous news piece on the ASIC note here.