Member Update: Claimant Intermediary Exemption
In NIBA’s previous releases in relation to the claims handing and settling changes, 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).
We are pleased to advise that NIBA has been successful.
The Financial Sector Reform (Hayne Royal Commission Response) (Claimant Intermediaries) Regulations 2021 have been issued and include the following broad carve out from the “Claimant Intermediary” definition in the Act:
New Regulation 7.1.04CAA
(1) For the purposes of subsection 761CAA(2) of the Act, a person is not a claimant intermediary in the circumstances set out in subregulation (2), (4), (5), (6), (7), (8), (9), (10), (11) or (12).
Insurance brokers
(4) The circumstances are that the person is an insurance broker (within the meaning of the Insurance Contracts Act 1984).
In the Insurance Contracts Act an “insurance broker” means a person who carries on the business of arranging contracts of insurance, whether in Australia or elsewhere, as agent for intending insureds.
A number of other exemptions from the claimant intermediary definition apply in relation to:
• mortgage brokers and mortgage intermediaries;
• qualified accountants;
• veterinarians
• travel agents;
• financial advisers;
• financial counsellors;
• property managers;
• estate managers; and
• public trustees.
What this means practically
The end result is that insurance brokers won’t be caught as “claimant intermediaries” when acting within the scope of the exemption. This means 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. Refer to previous releases for more information.
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.
NIBA is currently still liaising with Treasury and ASIC in relation to a transition issue in relation to the confirmation of transactions requirement in section 1017F which can be argued to technically apply to insurers and insurance brokers in relation to claims handling and settling transactions before the end of the transition period. We will provide a further update once matters are better clarified.