NEWS / Representation
WE ARE YOUR VOICE!
Quite a lot has happened since the December comments were written. The following is an overview of some of the things NIBA has been examining on behalf of Members.
COVID-19
The Insurance Council of Australia (ICA), in consultation with Australian Financial Complaints Authority (AFCA) and Australian Securities and Investment Commission (ASIC), took proceedings in the Supreme Court of NSW seeking clarification of issues relating to the interpretation of certain pandemic exclusion clauses which refer to the now repealed Quarantine Act. The proceedings went straight to the NSW Court of Appeal, where five senior Judges gave a unanimous decision in favour of policyholders. The Court found that clauses in policies that purport to exclude pandemic claims by reference to the Quarantine Act have no effect. The ICA subsequently announced its intention to seek special leave to appeal to the High Court of Australia. The financial services regulator in the United Kingdom ran a test case in the UK courts seeking clarification of the pandemic exclusion clauses in a number of London market policies. An initial decision has been handed down by the court, and both the regulator and a number of insurers have lodged appeals against that decision. The appeals have been heard, and at the time of writing we await the outcome of the appeal. NIBA continues to provide information to members in relation to government support for business, and the continuation of restrictions on community activity for health protection reasons. Those thinking of crossing state/ territory borders should consult the relevant state/territory websites for the latest information on any border restrictions that might be in place. We also commend the work of the ICA, which has been working with relevant state governments to ensure insurance industry personnel can travel across borders to assist with the recovery of communities following major weather events.
10 / INSURANCE ADVISER FEBRUARY 2021
ACCC Northern Australia Insurance Inquiry
The Australian Competition and Consumer Commission (ACCC) has released its third and final report under the Northern Australia Insurance Inquiry. The report makes a number of recommendations, most of which are likely to have limited if any impact on the availability and affordability of home, contents and strata insurance in northern Australia. The final report repeated an earlier recommendation that insurance broker commissions be abolished. NIBA has spoken with the Federal Government in relation to this issue, and understands the government remains committed to the 2022 review of remuneration arrangements for general insurance products and services. NIBA is preparing for that review.
FEDERAL
Royal Commission Reforms
Legislation implementing a number of Royal Commission recommendations passed the Federal Parliament prior to Christmas and will take effect during the course of 2021. The key provisions of interest to insurance brokers are as follows: Industry Codes of Practice: new provisions set out arrangements for ASIC to approve Codes of Practice, and to specify Code provisions to be legally enforceable. The Insurance Brokers Code of Practice (the Code) is currently under review, and NIBA will give further consideration in due course to the new Code of Practice laws, and how they might impact on the new Code. Use of the terms “insurance” and “insurer”: there are now stronger provisions which prevent use of the word
“insurance” for products and services that are not insurance. Care will need to be taken to ensure this word is not used in relation to the provision of non-insurance services, such as risk management advice. Also, do not call yourself an insurer if you are not APRA-authorised or are otherwise able to act as an insurer in Australia. Insurer avoidance of life insurance contracts: changes affect the ability of a life insurer to avoid contracts of life insurance in certain circumstances within three years of entering into the contract. Life risk brokers need to become familiar with this provision. Caps on commissions for products sold in conjunction with the sale or long term lease of motor vehicles: new provisions give ASIC the power to set caps for commissions paid in relation to a number of add-on risk products including tyre and rim insurance, mechanical breakdown insurance, consumer credit insurance and some others. Those involved in this area will need to monitor ASIC activity in this area. Claims handling and settling services: these reforms make insurance claims handling and settling services a financial service, and therefore they must operate under a financial services licence and be subject to the requirements of Chapter 7 of the Corporations Act. NIBA will provide detailed information to members in relation to these provisions shortly. Reference checking and information sharing: new provisions require an AFS licence holder to comply with new reference checking and information
