Treasury is considering requests for a number of areas to be exempt from a new add-on insurance deferred sales model, while consumer groups are pushing for minimal carve-outs.

The new regime, effective October 5, prohibits the sale of add-on insurance “for at least four clear days” after a consumer has entered into a commitment to acquire the principal product or service.

The Government has flagged exemptions for compulsory third party and add-on travel insurance, adding to an existing exemption for comprehensive car cover, and Treasury is reviewing submissions for other areas that may could be excluded through regulations.

The National Insurance Brokers Association (NIBA) says cover purchased through rental car counters is an example of where the deferred sales model would cause problems. Other instances include same-day transportation after livestock sales and third party, fire and theft insurance.

“There are a wide range of examples where the purchase of a product or service results in the immediate assumption of risk and it is entirely valid for that risk to be insured,” CEO Dallas Booth told insuranceNEWS.com.au.

The Consumer Action Law Centre, Financial Rights Legal Centre and WEstjustice say exemptions from the deferred sale rules should be restricted to the rarest of circumstances and where there is “extremely strong evidentiary justification”.

“These sales are often motivated by huge commission arrangements paid to retailers by insurers, leading to situations where retailers are incentivised to recommend poor value policies,” Consumer Action CEO Gerard Brody said.

The groups’ submission to Treasury notes that the Hayne royal commission broadly recommended that laws should be simplified and exemptions and loopholes minimised.