The corporate regulator is “ready to act” if it detects harmful conduct related to insurance claims handling or settlement, following recent reform.

From the start of this year, those providing claims services are required to hold an Australian financial services licence, meaning they must now comply with certain obligations and ensure services are provided in an efficient, honest and fair manner.

The changes apply to stand-alone claims handling firms that don’t currently hold a licence, as well as insurers and brokers who hold a licence already and need to extend it to include claims handling.

The Australian Securities and Investments Commission (ASIC) says this represents “a new chapter” in the history of insurance, and that the reform “closes a regulatory gap”.

It says more than 300 applications for a licence relating to claims were received last year, and it will collaborate with industry on any challenges in implementing the reform.

But the regulator also warns it will act if consumer harm is detected.

“We recognise the significant work the sector has undergone to prepare for the changes alongside other reforms stemming from the Financial Services Royal Commission,” ASIC said.

“In 2022, we will continue to monitor claims outcomes through our ongoing supervisory activities. We will be ready to act if consumer harm is found to be caused by conduct associated with claims handling and settling.”

ASIC says insurers should invest in building data capabilities around claims handling and settling services.

“This is vital for recording data accurately and in a format that is useful (i.e. searchable and reportable). It will also help insurers to gauge their claims handling performance and detect issues and areas for improvement at an early stage.”