ASIC grants relief to insurers and brokers for obligations arising from incidental retail cover

ASIC has made a legislative instrument, ASIC Corporations (Incidental Retail cover) Instrument 2022/716, exempting insurers and brokers from certain obligations when offering retail insurance as part of bundled business insurance contracts.  

These obligations are noted in Chapter 7 of the Corporations Act 2001 (Cth) in relation to ‘incidental retail cover’, defined as retail insurance cover that forms a minor, incidental and inseparable part of a wholesale insurance product provided to a business. 

The incidental retail cover must meet the conditions of fulfilling this definition to qualify for relief from the obligations.  

In instances where retail cover is offered as an optional extra, where a business may choose to separately purchase the cover for an additional fee, the cover is not considered to be genuinely incidental, and relief will not be granted.  

NIBA has acknowledged that the instrument will provide greater certainty for the insurance industry and help to reduce disproportionate regulatory burden. 

Philip Kewin, NIBA Chief Executive Officer said “NIBA welcomes the relief provided by this announcement. While a few questions remain, this will certainly provide greater certainty for brokers and insurers, and we appreciate the consultative approach ASIC has taken to deliver this instrument.”    

The legislative instrument also aims to reduce compliance costs incurred by insurers and brokers, and prevent such costs from being passed on to businesses.  

The relief instrument commenced on 16 August 2022 and expires in three years, with ASIC reviewing its operation before its expiry.  

For more detailed guidance, please refer to the summary from Radford Lawyers.  

For more information, read ASIC’s Explanatory Statement on the instrument here.