March 4, 2019
The Coalition Government has released a consultation paper on removing the exemption of insurance claims handling from the definition of ‘financial service’ under the Corporations Act.
In an update released by Treasurer, Josh Frydenberg at the end of last week, the Treasurer referenced Commissioner Hayne’s recommendation in his Final Report “…that the Corporations Regulations be amended, so that the handling or settlement of insurance claims, or potential insurance claims, is no longer excluded from the definition of ‘financial service.”
The Royal Commission’s Recommendation 4.8 reads:
Recommendation 4.8 – Removal of claims handling exemption
The handling and settlement of insurance claims, or potential insurance claims, should no longer be excluded from the definition of ‘financial service’.
…regulation of insurance claims handling as a financial service …will allow ASIC to enforce a higher standard of behaviour
The Treasurer’s statement said the Government recognised that inappropriate claims handling practices can cause significant consumer detriment as highlighted through the Royal Commission’s round six hearings into insurance.
It added that regulation of insurance claims handling as a financial service under the Corporations Act will allow ASIC to enforce a higher standard of behaviour in the industry and ensure consumers can expect the same standard from insurers handling claims as they can from all financial service providers.
Click here to access the Treasury’s consultation paper on Insurance Claims Handling, where the closing date for submissions is 29 March 2019.