(Re)Insurance and Regulation Focus - fortnight commencing 15 September

Key developments in the last fortnight

APRA’s attention on AI and operational risk management

APRA is taking action to monitor emerging threats to the financial services industry, including in regards to the use of artificial intelligence. APRA wants to ensure the effective mitigation of operational risks for financial services businesses that increasingly rely on third party providers who tend to become the target for cyberattacks (noting the recent data breach suffered by Qantas). APRA emphasises that operational risk management becomes increasingly important (as required under CPS 230 which commenced on 1 July 2025) and that they will assess the effectiveness of compliance over the next year.

AI, third-party risk and governance on APRA radar

High Court grants ASIC special leave to appeal the Block Earner decision

In May 2025, ASIC sought special leave from the High Court to appeal the Full Federal Court’s decision in the Black Earner case. As a reminder, the Full Court found that Block Earner, a digital asset service provider, did not engage in unlicensed financial services as the product it issued (being a fixed-yield digital asset-related product) was not a financial product. ASIC considered that it is in the public interest to seek clarification from the High Court on the scope of the definition of “financial product” in the Corporations Act and on the regulations governing interest-earning products and products involving a conversion of assets from one form to another. The appeal will be heard on a date to be set by the High Court.

High Court grants ASIC special leave to appeal Block Earner decision

ASIC demands further regulatory simplification ideas

ASIC has released a new report on regulatory simplification, which marks the first milestone in ASIC’s simplification work. The report reveals that ASIC has culled more than 9,420 pages of regulation since the beginning of the year and calls for further proposals to make regulation more accessible and easier to navigate, while maintaining consumer protections. Last year, ASIC formed a Simplification Consultative Group with industry leaders aiming to simplify ASIC’s regulation. The report outlines ASIC’s initiatives in key areas including easier access to regulatory information, less complexity in regulatory instruments and easier interaction with ASIC. ASIC is seeking feedback on these initiatives and simplification more broadly by 15 October 2025.

ASIC slashes red tape and calls for further regulatory simplification proposals

ACCC holds concerns with IAG’s proposed acquisition of WA’s RAC insurance business

The ACCC has expressed concerns with Insurance Australia Group’s (IAG) proposed acquisition of RAC Insurance from the Royal Automobile Club of Western Australia, which would enable IAG to underwrite motor insurance and home and contents insurance under the RAC brand in Western Australia. The ACCC’s preliminary concerns are that the proposed transaction will likely substantially lessen competition in the supply of those types of insurance in Western Australia, as RAC has a dominant market share compared to any other insurer, and that the proposed acquisition would increase market concentration even more and lead to premium increases. The ACCC is also concerned that IAG would be gaining control of those quality and cost-effective repairers in Western Australia and limit rival insurers’ access to repairers, which would further impact their rivals’ competitiveness. The ACCC invites submissions by 18 September 2025.

IAG's proposed acquisition of WA's RAC insurance business raises concerns | ACCC

Eric Insurance winding up adjourned

Last month, APRA sought a winding-up order for Eric Insurance, a motor add-on insurer who entered run-off in October 2023. At the Federal Court hearing on the winding-up order held on 12 August 2025, Justice Jackman adjourned the application to wind up Eric Insurance to allow creditors time to consider an alternative resolution. APRA notes that a creditors’ meeting will be held on 16 September 2025 to vote on the alternative plan for a deed of company arrangement, which would consider plans for managing policyholder claims. An APRA spokesperson said after the hearing that 'APRA is closely monitoring Eric’s withdrawal from the insurance industry to achieve the most favourable outcome for policyholders'. The new hearing date is set for 25 September 2025 and the result remains to be seen.

APRA monitors Eric Insurance’s exit from the general insurance market

AFSL responsible manager banned by ASIC

ASIC has banned the former responsible manager and compliance manager of MWL Financial Services Pty Ltd, Mr Robert John Tohill, for a period of five years from providing any financial services or acting as an officer, responsible manager or compliance manager, or being involved in any financial services business or controlling an entity that carries on a financial services business. ASIC found that Mr Tohill’s misconduct involved participating in contraventions of financial services laws, turning a blind eye to approve false and misleading information in Statements of Advice and releasing Financial Services Guides that were not compliant, failing in his gatekeeper functions as the compliance manager and responsible manager. This serves as an important message from ASIC that responsible managers may face real consequences for failing to perform their role competently in managing a financial services business.

ASIC bans compliance manager Robert John Tohill of MWL Financial Services

ASIC instrument remade for basic deposit and general insurance product distribution

It is unsurprising that ASIC has remade a legislative instrument, ASIC Corporations (Basic Deposit and General Insurance Product Distribution) Instrument 2025/520, to extend the relief which exempts Australian financial services (AFS) licensees from appointing a basic deposit or general insurance product distributor as an authorised representative. Like the previous instrument, this relief aims to reduce the regulatory burden and compliance costs for deposit product and general insurance providers while keeping the consumer protection obligations imposed on AFS licensees. ASIC considers the previous instrument has been effective and will continue monitoring its appropriateness.

ASIC remakes basic deposit and general insurance product distribution legislative instrument

Key dates

• 22 September 2025 – APRA consultation on proposed minor amendments to the prudential and reporting framework closes.
• 15 October 2025 – ASIC consultation on its initiatives to simplify its regulations and further proposals closes.

In case you missed it

Sparke Helmore was nominated as a finalist for Professional Services Firm of the Year award at this year’s Australian Insurance Industry Awards. While we were unsuccessful on the night, we were pleased to have been recognised.