- From 1 January 2022, persons providing claims handling and settling services are required to hold an Australian financial services (AFS) licence under the Corporations Act 2001.
- Insurance claimants are entitled to ask whether those who are providing assistance to them in handling claims are licensed.
- ASIC will work with industry to address any challenges they may face in the course of implementing these significant reforms.
A new chapter in the history of insurance in Australia began on 1 January 2022 when the claims handling and settling service reforms came into full force. Persons who provide claims handling and settling services are now required to hold an AFS licence. This means that they must comply with the obligations owed by a person licensed to provide financial services. This includes ensuring those financial services are provided in an efficient, honest and fair manner.
These changes apply to stand-alone claims handling firms who don’t currently hold a licence, as well as insurers and insurance brokers who hold a licence already (and need to extend it to include claims handling).
Australian Securities and Investments Commission (ASIC) received over 300 applications for a claims handling and settling service AFS licence authorisation in 2021. Licensees are searchable on ASIC’s professional registers.
Implementing the reforms
Importantly, this reform closes a regulatory gap and brings claims handling and settling into the fold as a financial service. The ASIC recognise the significant work the sector has undergone to prepare for the changes alongside other reforms stemming from the Financial Services Royal Commission. The ASIC will continue to work with industry to address any challenges in the course of implementing these reforms.
Nevertheless, we believe a key ingredient to the successful implementation of the reforms is for insurers to invest in building data capabilities around their claims handling and settling services. This is vital for recording data accurately and in a format that is useful (i.e. searchable and reportable). It will also help insurers to gauge their claims handling performance and detect issues and areas for improvement at an early stage.
In 2022, The ASIC will continue to monitor claims outcomes through our ongoing supervisory activities. They will be ready to act if consumer harm is found to be caused by conduct associated with claims handling and settling.
Reminder to claimants
Summer is the peak season for extreme weather events, and as a result, insurance claims for property damage. If you need to make an insurance claim, the ASIC encourage you to deal directly with your insurer or an authorised insurance broker, financial adviser or legal representative. Be aware of unscrupulous operators – sometimes referred to as ‘storm chasers’ or ‘disaster chasers’ – who may seek to take advantage of the situation.
You should also be wary of people who:
- approach you with offers to inspect property damage and perform repair works
- attempt to charge you fees for helping you to lodge a claim with your insurer
- discourage you from dealing directly with your insurer
- persuade you to sign a contract immediately.
Remember, you are entitled to ask these people who they are acting for and whether they are licensed to provide assistance with handling claims. They should be able to show you proof that they are licensed.
Source: © Australian Securities & Investments Commission. Reproduced with permission.
ASIC is Australia’s integrated corporate, markets, financial services and consumer credit regulator.
LS Consultancy are experts in Marketing and Compliance. We provide a cost-effective and timely bespoke copy advice and copy development services to make sure all your advertising and campaigns are compliant, clear and suitable for their purpose.
Our range of innovative solutions can be tailored to suit your unique requirements, no matter whether you’re currently working from home, or are continuing to go into the office. Our services can be deployed individually or combined to form a broader solution to release your energies and focus on your clients.
Call Us Today on 020 8087 2377 or send us an email.
We’re looking for guest writers with business know-how and experience to create outstanding articles to feature on our website. Sound like you? Then find out more…