ASIC urges haste for insurance claims handling AFS licence applications

The Australian Securities and Investment Commission (ASIC) has called on insurance claims handling firms to lodge licence applications (new and varied) as soon as possible, and by no later than 7 May 2021.

Since 1 January 2021, claims handling and settling is a financial service which requires a licence by 1 January 2022.

Deputy Chair, Karen Chester said, “Time is running out for firms to lodge their applications with ASIC. To date we’ve received fewer than 15 applications for the new claims handling and settling service. Some applications received have also needed to be re-submitted because of their poor quality.”

“We are concerned that firms are running the risk of not submitting a complete application in time to get the benefit of the legislated transition period. Firms need to submit an application no later than 7 May 2021. Failing to do so poses a real risk that these firms will have to stop providing claims handling and settling services after 30 June 2021.”

The National Insurance Brokers Association (NIBA) CEO Dallas Booth confirmed that NIBA members have been provided further detailed comments on 13 April regarding this topic.

Applications submitted after 7 May 2021 risk being rejected at the deadline of 30 June 2021 which is the legislative deadline to access transitional arrangements. The regulator has indicated that it will reject an application if it is incomplete. Rejections occurring close to the 30 June 2021 deadline may mean that the applicant has insufficient time to rectify and re-submit their application.

A complete application accepted by 30 June 2021 can proceed to assessment and a decision can then be made whether to grant or vary an AFS licence. These applicants can continue to provide claims handling and settling services while ASIC assesses the application during the 6 month transition period.

To assist firms, ASIC issued a draft version of an information sheet on 27 November 2020 to help firms prepare and submit their applications as soon as possible after 1 January 2021. ASIC has now issued the final claims handling and settling service information sheet – INFO 253. INFO 253 assists firms to understand how the claims handling and settling services reforms may apply to them.

Minor changes have been made to the draft information sheet published in November 2020 following feedback received from stakeholders. Updates have also been made to incorporate relevant regulations made by government. The regulator anticipates that the government will make further regulations in relation to persons who are claimant intermediaries, and ASIC will update INFO 253 once they are made.

INFO 253:

• sets out who needs to be  authorised to provide claims handling and settling services for insurance products and who can act on an AFS licensee’s behalf
• explains how and when to apply for an AFS licence, or variation to an existing AFS licence, including materials that are needed to support an application, and
• refers to existing regulatory guidance on how to meet the general obligations under section 912A of the Corporations  Act 2001, and indicates how the obligations may be tailored to claims handling.

Firms 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.