(Re)Insurance and Regulation Focus - week commencing 31 August 2026
01 September 2026
Key developments in the last fortnight
ASIC warns home insurers that cash settlement is not a shortcut
ASIC released findings on 31 August 2026 from a recent review of home insurance cash settlement practices covering ~65% of the market following claims resulting from Cyclone Jasper in Far North Queensland and insurers’ broader practises since. ASIC found partial cash settlements were used in at least 63% of reviewed claims, with 2 of 5 insurers reviewed utilising the method across over 80% of claims. 52% of cash settlement offers rested on a single quote, 73% of those from the insurer’s own preferred supplier, and 1 in 4 claims were cash settled wholly or partly on the basis of pre-existing maintenance issues. ASIC also found that 4 of 5 insurers failed to consistently apply their vulnerable customer policies, including failures to record vulnerability information or pass it on to third parties in the claims handling process. ASIC also found that settlement amounts increased materially once a customer complains, which the Regulator raised as a concern which may call into question the fairness of the initial offer. While no enforcement action has been taken at this stage, insurers should note ASIC’s warning, together with newly published guidance from AFCA discouraging cash settlement as a first option, as reported in our previous publication for the fortnight commencing 17 August 2026.
26-202MR ASIC warns insurers cash settlements should not short-change homeowners in need | ASIC | (Re)Insurance and Regulation Focus - week commencing 17 August
Frontier AI insights from APRA and ASIC industry roundtables
On 27 August 2026, APRA and ASIC released a joint information paper summarising the nine industry roundtables held across June and July, involving more than 600 attendees from 380 entities, supported by the Australian Signals Directorate (ASD) with participation from the RBA, Treasury, and the ACCC. The central message of these discussions is that industry must move from awareness of frontier AI risk to demonstrable action, with the Regulators concerned about whether entities can make decisions, maintain critical operations, and recover when incidents unfold faster and involve more complex dependencies. Key themes included the rising cost of weak cyber fundamentals, governance, and escalation as pressure points, with the Regulators stressing that Boards need to define risk appetite, escalation authority, and communications before a crisis, not during or after one. Defensive AI was noted as promising but immature and no substitute for fundamentals, and third-party concentration risk turning isolated incidents into sector-wide disruption. Appendix 2 of the information paper sets out a table of board questions and corresponding evidence to demonstrate preparedness, together with board paper for regulated entities. Both ASIC and APRA have released parallel communications which report on the outcome of the roundtables and the information paper.
26-201MR ASIC and APRA warn frontier AI awareness must turn to action | ASIC | Insights from the APRA-ASIC Industry Roundtables | APRA
ASIC and APRA both release 2026-27 Corporate Plans
On 20 August 2026, APRA released its 2026-27 Corporate Plan. This plan outlines three strategic priorities: maintaining the safety and stability of Australia’s financial systems, 'getting the balance right' so that those objectives are delivered without undue industry costs, and improving their own organisational effectiveness. Supervision priorities include resilience to AI-enabled cyber threats and a renewed focus on quantum computing risk, concentrated reliance on common technology platforms and material service providers, more intensive supervision where geopolitical risk gaps persist, and new system-risk stress tests. On policy, APRA will finalise its governance package for banks, insurers and superannuation funds expected to commence at the start of 2028, and will consult jointly with ASIC on FAR changes to cut administrative burdens. ASIC Chair John Lonsdale has framed this year’s policy agenda as a net-neutral on regulatory burden, with new requirements broadly offset by regulation elsewhere.
A few days later, on 26 August 2026, ASIC released its 2026-2027 Corporate Plan. This plan is framed around being easier to deal with for entities trying to comply and hard to avoid for those causing harm. ASIC’s consumer protection work targets scams, debt collection, buy now pay later services, superannuation advice fee deductions and with specific regard to general insurance, new work on insurance claims intermediaries in disaster-affected communities. ASIC will also lift its AI focus, covering bank’s use of AI in customer facing services, effects on consumers and investors, and AI-driven manipulation, deepfakes and misinformation as a market integrity risk. The burden reduction commitments include simpler guidance and instruments, more efficient licensing, closer coordination with other regulators on data collection, and broadly mirror APRA’s corresponding plan outlined above.
APRA Corporate Plan 2026-27 | ASIC Corporate Plan 2026–27
APRA imposes licensing conditions on a bank
On 18 August 2026, APRA imposed licensing conditions on a bank following findings of longstanding and pervasive weaknesses in its non-financial risk management framework and failure of earlier efforts to deliver sustainable improvement. This action follows previous independent root cause analysis required by APRA in December 2025, completed by Deloitte, which found weaknesses to be prevalent across the organisation: no clear and reliable view of regulatory obligations, material risks and key controls, material deficiencies in governance, accountability, compliance management and risk oversight, and persistence of key weaknesses despite years of remediation. The conditions require a comprehensive rectification program, engagement of an independent assurer and board attestation, and that APRA will maintain the existing $50 million operational risk capital add-on until satisfied the underlying concerns are addressed. APRA noted the bank remains financially sound with strong capital and liquidity, and continues to work in coordination with ASIC and AUSTRAC.
APRA releases response to Consultation on Transition of Life Insurance D2A data collections to APRA Connect
On 31 August 2026, APRA released its response to the Transition of Life Insurance D2A (Direct-2-APRA) data collections to APRA Connect which ran from 24 April 2026 to 3 July 2026. This proposed transition is driven by APRA’s decision in March 2026 to decommission D2A altogether, consolidating APRA Connect and therefore reducing reporting requirements and streamlining data management. No submissions were made to the Consultation, and APRA has made only minor amendments for consistency and clarity.
Response to consultation on transition of Life Insurance D2A data collections to APRA Connect | APRA
Key dates
- 8 September 2026 – ASIC consultation on proposed extension of various financial services, credit and markets legislative instruments (Link)
- 25 September 2026 – Attorney General’s consultation on strengthening Australia’s response to modern slavery in supply chains closes (Link)
- 16 October 2026 – Consultation on fee transparency in health care closes (Link)
In case you missed it
The Sparke Helmore team has been advising on the application of FAR and compliance measures, including conducting FAR simulation exercises for accountable persons, embedding and testing the effectiveness of entities’ FAR implementations. If this is of interest to you, please reach out and let us know.
