(Re)Insurance and Regulation Focus - fortnight commencing 18 August 2025

Key developments in the last fortnight

Mercer Super sued for systemic failures of breach reporting obligations

ASIC has commenced proceedings in the Federal Court against Mercer Super, one of the largest superannuation funds in Australia, alleging failures to comply with the reportable situations regime. ASIC alleges that from October 2021 to September 2024, Mercer Super did not have adequate systems in place to promptly report ongoing investigations into significant breaches of their core obligations including those related to incorrect insurance premium refunds for dead members. ASIC also alleges that Mercer Super gave false or misleading information to ASIC understating the number of impacted members. ASIC criticism of such failure reflects 'a lack of care for customers'. Over the past 12 months, ASIC has also sued AustralianSuper and Cbus over alleged failures in handling death benefit and insurance claims, demonstrating continuing efforts in targeting member services failures in the superannuation sector as part of its 2025 enforcement priorities.

ASIC sues Mercer Super alleging systemic failure to report member services investigations

APRA consults on publishing GI & LI determination and data

APRA has released a consultation paper on the proposed non-confidentiality publications on determinations and statistics for the general insurance (GI) and life insurance (LI) industries. In April 2024, APRA commenced consultation on proposed enhancements to the quarterly insurance statistical publications to align with the updated insurance reporting framework following the implementation of Australian Accounting Standards Board 17 Insurance Contracts (AASB17), for which the submissions were largely supportive. APRA is now consulting on the content of the remaining GI and LI publications to reflect the new reporting framework and the proposal to determine certain GI and LI data to be non-confidential. Submissions close on 5 September 2025.

APRA consults on GI & LI non-confidentiality determination and statistical publications

ASIC consults on proposed updates to conflicts management guidance

ASIC has released proposed updates to its Regulatory Guide 181 Licensing: Managing conflicts of interest (RG 181) to reflect developments in law and policy with regard to ASIC’s private markets surveillance work. This change is crucial for financial services businesses as conflicts management is a core obligation for all AFS licensees under the Corporations Act. The updates to RG 181 provide guidance on the types of conflicts that require attention and management, the requirement to implement robust and tailored arrangements to manage conflicts and how AFS licensees can effectively manage conflicts to comply with their obligations. ASIC considers the updated RG 181 supports its strategic priority to improve transparency and consistency in the financial markets with the goal to ensure efficient and fair operations.

ASIC seeks feedback on proposed updates to conflicts management guidance

Funeral bonds provider KeyInvest scrutinised by APRA

APRA has imposed an additional $5.5 million capital requirement and additional licence conditions on KeyInvest, a life insurer and friendly society that mostly offers funeral bonds. APRA conducted an independent review of KeyInvest’s risk management framework, finding deficiencies and raising concerns about the board’s oversight of the insurer’s long-term strategies. KeyInvest has accepted APRA’s findings and has taken steps to prepare a remediation plan to address the review’s recommendations. It is also required to develop an APRA approved board renewal plan. APRA has emphasised that boards bear the responsibility to ensure risk management frameworks are implemented and effective, and that it will take action if insurers fall below APRA’s expectations.

APRA increases capital requirement and imposes licence conditions on KeyInvest

APRA moves to wind up Eric Insurance 

APRA has sought a winding-up order for Eric Insurance, a motor add-on insurer. If granted, Eric would be forced to close operations and have its assets liquidated. Eric entered run-off in October 2023 and has stated that it is well positioned to manage the run-off until 2032, as it continues to explore options to sell the business or transfer its portfolio to another insurer. In January last year, Eric informed customers that its website had experienced cyber-attacks, with personal information being accessed by cyber criminals. The Federal Court hearing on the winding-up order was held on 12 August 2025.

Regulator APRA moves to wind up Eric Insurance

NSW examines strata commissions 

The NSW government has asked the State’s Productivity and Equality Commission to review the market impacts of banning strata managers from receiving commissions or other conflicted remuneration, concerned that strata managers are incentivised to act in their own interests rather than the owners’ interests. The Commission will consider any unintended consequences of the ban to ensure strata owners will not be worse off, and it will also consider whether the ban will lead to better value for money, improved services with lower costs and simpler arrangements. This inquiry follows strata reforms to increase strata managers’ accountability and better protect lot owners. The public consultation will be carried out early next year.

NSW inquiry into strata managing agent insurance commissions

Key dates:

• 29 August 2025 – AFCA consultation closes on AFCA’s general insurance claims handling approach document.
• 1 September 2025 – ASIC consultation closes on proposed updates to Regulatory Guide 183 Approval of financial services sector codes of conduct.
• 5 September 2025 – ASIC consultation closes on proposed updates to Regulatory Guide 181 Licensing: Managing conflicts of interest.
• 5 September 2025 – APRA consultation closes on GI & LI non-confidentiality determination and statistical publications.
• 15 September 2025 – Australian Government Productivity Commission’s consultation closes on its interim report on harnessing data and digital technology.

In case you missed it

With the new mandatory climate reporting requirements coming into effect this year (and phasing in over the next two years), the Sparke Helmore team have been delivering a number of presentations on the obligations and compliance strategies for Australian organisations. Matt Ellis, Partner is part of a Reinsurance Discussion Group (RDG) panel on this very topic on Monday 18 August. If you need any advice or would like to discuss these reporting requirements, feel free to reach out to anyone in our team.