Claims to Come Under Australian Financial Services Regulation Scheme

The Australian Government is to bring claims handling and claims management under its financial services regulators.

The country’s Treasury has issued the draft Bill and Regulation, which will now go to wider consultation until 10 January and is then expected to become law on 1 July 2020.

It will require firms involved in claims handling to apply for an receive a Australian Financial services Licence (AFSL) or be authorised by a licensee.

The firms that will come under the new claims handling definition within the financial services act include any firm of person that :

  • make a recommendation or state an opinion that could influence a decision whether to make an insurance claim;
  • assist another person to make an insurance claim;
  • assess whether an insurer is liable under an insurance product;
  • decide to accept or reject all or part of an insurance claim;
  • quantify an insurer’s liability under an insurance product;
  • offer to settle all or part of an insurance claim; or
  • satisfy a liability of an insurer under an insurance claim.

It will see the insurers, loss assessors, insurance claims managers, insurance brokers who handle insurance claims on behalf of an insurer come under the new remit along with those who offer financial advice to an insured and who handle and settle an insurance claim on behalf of the insurer.

The new requirements will demand that firms are obliged to ensure that claims handling services are provided efficiently, honestly and fairly.

Interestingly legal services and law firms are excluded from coming under the regulations.