NIBA Member Update: Claims handling as a financial service
The Financial Sector Reform Act 2020 made changes to the way claims handling and settling services are treated under the Corporations Act 2001.
Under the Act, which received Royal Assent on 17 December 2020, claims handling and settling services will now be considered a financial service. As such those providing such services must do so under an Australian Financial Services Licence granted by ASIC.
Any insurance broker who has authority to make decisions in relation to claims must discuss the matter with the relevant insurance company and must take steps to either obtain a claims handling endorsement on their AFS licence or become an authorised representative of the insurer.
Brokers have until 30th June to apply to ASIC for a variation of their AFS licence, after which a transition period will commence from 1st July 2021 to 31st December 2021. During this time claims handling and settling services can only be provided if a complete application was lodged by 30 June 2021, and it has either been granted or is still pending. From 1st January 2022 claims handling and settling services can only be provided if the application has been granted.
NIBA’s legal Adviser, Mark Radford, has prepared the following update for members on this issue. ASIC has also published an information sheet for members which includes information on how to apply for a variation which can be accessed here.
