As we’ve noted in previous editions of Sunrise Exchange News, the Australian Prudential Regulation Authority may not have the ability to stamp out unauthorised foreign insurers, but it is doing everything it can to discourage anyone using them. So far that has been limited to advising people about the less pleasant aspects of such insurers and suggesting they may have a case against their broker if a claim isn’t paid – although as we’ve also previously noted, brokers are being very careful to ensure clients sign a declaration that they understand the situation.

Now law firm Phillips Fox has pointed out an instance where the Financial Services Reform Act will also limit the foreign insurers’ reach into local markets.

The Act regulates businesses that induce people in Australia to use their financial services, and this includes such instances as “a foreign insurer offering its products for sale when its representatives attend client promotions or road shows in Australia directed at clients, and… where they are directed to intermediaries that will be sourcing clients for the overseas insurer”.

Phillips Fox says that in such cases the overseas business will need an Australian financial services licence of its own, “or will have to enter into an intermediary authorisation with an AFS licensee which has the required authorisations”. And that would bring them under Australian law.