The Australian Securities and Investments Commission (ASIC) has warned insurers and brokers will need to be ready for design and distribution obligations from “day one” following a delay in their introduction due to the COVID-19 pandemic.

ASIC Senior Executive Leader – Insurers Emma Curtis says monitoring and data collection will be critical to ensuring the new regime prevents consumer harm, and brokers have a key role.

“It is important that insurance industry experts, like brokers, get involved early to make it work,” she told the National Insurance Brokers Association (NIBA) virtual convention last week.

“Collaboration between insurers and brokers on information flows under DDO is just one example where industry will need to reach common sense standardised solutions.”

The laws are set to take effect on October 5 next year, following a six month delay due to the coronavirus, and Ms Curtis says final regulatory guidance will be released in “coming weeks”.

“I think DDO will be a game-changer for everyone in the financial services industry,” she told the convention. “We expect that over time this consumer-centric process will drive improvements in the products available for your clients as insurers refine their existing product suite and design new products.”

Ms Curtis says the laws ease the burden for consumers, who have battled with complex and detailed disclosure documentation, particularly in the insurance sector.

Instead, it will be the responsibility of insurers to ensure products are designed to meet the needs of defined target markets and are distributed appropriately.

Ms Curtis also told the convention the recent Insurance Brokers Code Compliance Committee report has raised “some serious concerns”, including around transparency and the long delay in the code’s review.

“A significant concern for ASIC is that almost half of subscribers continue to report no breaches of the code,” she said.

“This really raises questions about the adequacy of breach detection and reporting mechanisms and the robustness of compliance frameworks and most importantly, perhaps culture.”

She says it is also important that a lengthening in complaints handling timeframes does not become a trend.