CEO / Welcome
NOW IS THE TIME TO TAKE ROYAL COMMISSION REFORMS SERIOUSLY
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ith Unfair Contract Terms reforms commencing early April 2021, and a number of other reforms taking effect in early October 2021, now is the time for all member principals and all insurance brokers to bring themselves up to speed on the reforms, and how they might impact their business. Some of the reforms – Design and Distribution Obligations (DDO), Anti-Hawking reforms, Deferred Sales Model (abolition of add-on insurance) will affect most if not all insurance brokers in Australia. To properly advise your clients, brokers will need to understand the Unfair Contract Terms reforms, and the new duties of disclosure. Broking firms who provide claims handling services on behalf of the insurer will need to get their ASIC licence amended or get an appointment as an authorised representative of the insurer for claims handling purposes. All of this is important. It is complicated, and difficult. NIBA has provided detailed notes to members on Design and Distribution, Claims Handling and Unfair Contract Terms reforms. We will continue to provide detailed commentaries on the reforms as they are finalised.
A MESSAGE TO MEMBER PRINCIPALS AND OPERATIONS MANAGERS
In many cases, the impact of the reforms will depend very much on the types of policies that are arranged by the broking firm, and the services that are provided to clients in conjunction with the insurance policies (such as premium funding).
I HATE TO SAY THIS, BUT…
I do hate to say this, but it seems to me that each insurance broking firm will need to get their legal adviser to review the policies that are arranged and other services that are provided in order to establish what needs to be done under the Design and Distribution reforms. They will need to advise whether products arranged by your firm are, or are not, caught by DDO. If they are caught, the firm will need to establish procedures which meet DDO obligations. An important aspect of DDO reforms impact advertising and marketing. If the broking firm has products caught by DDO, they will need to get legal advice as to how their
6 / INSURANCE ADVISER APRIL 2021
marketing and advertising will need to be adjusted as a result of the reforms. NIBA can only provide general commentary on these matters, because it will depend on what happens in each firm, and how the firm manages and processes the products and services. It will also be important for all broking firms to get careful legal advice as to how the Claims Handling reforms might impact the business. For broking firms who provide claims support services for and on behalf of the client only, there should be no problems, but if that is not the case the firm will need to carefully review the new obligations and determine the steps needed to comply. NIBA has provided detailed commentary to members in relation to this.
NOW IS THE TIME
Now is the time for all member principals and operations managers to look seriously at the Royal Commission reforms, determine which reforms will have an impact on their business, and work out how the business needs to be changed to comply with the reforms. All insurance brokers need to start to familiarise themselves with the reforms and understand how the reforms could have an impact on the advice they give to clients. I can’t emphasise too strongly: now is the time to take this seriously.
DALLAS BOOTH Chief Executive Officer, NIBA
