Home / Regulatory & Government / Treasury opens claims bill consultation
2 December 2019
Claims handling will become a financial service overseen by the Australian Securities and Investments Commission from July under draft legislation released on Friday.
The bill, developed in response to a Hayne royal commission recommendation, means claims handling will be subject to laws already requiring other financial services to be conducted “efficiently, honestly and fairly”.
Insurers and their representatives will be expected to handle and settle claims fairly, transparently and without delay, an explanatory statement released with the draft laws says.
“When an insurance claim is not handled and settled in this manner, it can lead to disputes and financial loss to the insured, which can undermine public trust in the financial sector.”
Those affected would include insurers, loss adjusters, fulfilment providers with authority to reject all or part of a claim, claims managers, certain insurance brokers and certain financial advisers.
Regulations specify that advice regarded as a necessary part of handling and settling a claim is excluded from the “financial product advice” definition, allowing recommendations and opinions to be given without triggering obligations such as providing a Statement of Advice.
The Insurance Council of Australia in a submission earlier this year supported making claims handling a financial service while calling for rules to be drafted so personal advice requirements are not unnecessarily triggered, and for changes to consider the broad range of parties involved.
National Insurance Brokers Association CEO Dallas Booth last week noted the release of the draft legislation and regulations and said the group would be reviewing the details and making a submission early in the new year.
The consultation on the draft documents closes on January 10. More details are available here.