The National Insurance Brokers Association (NIBA) says broking firms should consult a legal adviser on new design and distribution obligations as a priority as the industry continues discussions on how the new legislation will work.

CEO Dallas Booth says a key focus relates to firms who use “broker wordings” or their own schemes, where they have been involved in the design of the policy and the development of cover provided.

In those cases, the broker will need to work closely with insurers and underwriters over matters such as who is responsible for preparing target market determinations and how product review obligations will be implemented.

“You will most likely need to get legal support for this process, in order to ensure you are meeting the legislative obligations,” he says. “We continue to urge all members with broker wordings to look closely into these matters now.”

NIBA is continuing to work with the Insurance Council of Australia to understand how the legislation will work.

“We are also aware that several insurers are making contact with brokers to discuss these matters directly,” he said. “It will be unfortunate if insurers take a range of approaches to these matters.”

The new rules are set to take effect on October 5 after the Federal Government delayed the start date by six months due to the coronavirus pandemic.

“This is welcome, but there is absolutely no room for complacency, the new rules will apply to every product that currently has a product disclosure statement attached to it,” Mr Booth said.

Australian Securities and Investments Commission (ASIC) Senior Executive Leader – Insurers Emma Curtis said last year that insurers and brokers will need to be ready for the new obligations from “day one”.