The Australian Securities and Investments Commission (ASIC) has warned “time is running out” for insurance claims handling firms to apply for licences, which are mandatory by January 1 next year under new laws that were passed last December.

ASIC issued the warning last week, after it received less than 15 applications including some that had to be re-submitted because of their poor quality.

“Time is running out for firms to lodge their applications with ASIC,” Deputy Chairman Karen Chester said.

“We are concerned that firms are running the risk of not submitting a complete application in time to get the benefit of the legislated transition period.”

She says firms need to apply no later than May 7 as incomplete applications submitted after the date risk being rejected at June 30, which is the legislative deadline to access transitional arrangements.

Rejections occurring close to the June 30 deadline may mean that the applicant has insufficient time to rectify and re-submit their application, ASIC says.

Ms Chester says there is a “real risk” that insurance claims handling firms which have not completed the necessary paperwork will have to stop offering the service after June 30.

Since the start of the year, claims handling and settling is a financial service that requires a licence by January 1 next year.

As part of the 12 month-transition to the new regime, firms that must hold an Australian Financial Services (AFS) licence must lodge an application or variation request by June 30 in order to continue to provide claims handling and settling services, while ASIC assesses their application.

Failure to submit a complete application by or on June 30 means a firm will be in breach of the laws if they continue to provide claims handling and settling services from July 1.

A complete application accepted by June 30 can proceed to assessment and a decision can then be made whether to grant or vary an AFS licence.

ASIC says it has made minor changes to the draft information sheet it released last November seeking stakeholder input about the claims handling reforms.

The changes and other updates are contained in INFO 253, the corporate regulator’s final claims handling and settling service information sheet.

INFO 253 sets out who needs to be authorised to provide claims handling and settling services for insurance products and who can act on an AFS licensee’s behalf.

It also explains how and when to apply for an AFS licence, or variation to an existing AFS licence, including materials that are needed to support an application.

ASIC anticipates that the Government will make further regulations in relation to persons who are claimant intermediaries and will update INFO 253 when the changes are finalised.

Click here for INFO 253.