(Re)Insurance and Regulation Focus - fortnight commencing 26 May 2025

Key developments in the last fortnight

Competition regulator gives insurance merger the ‘green light’

IAG’s acquisition of RACQ Insurance Limited is unlikely to substantially lessen competition and will not be opposed said the ACCC in a recent announcement. The competition regulator has found that, due to the dwindling market share of RACQ and overlap in the products offered by both insurers (namely, home and contents and motor insurance) the acquisition is unlikely to have the ability to diminish prices or supply and won’t affect the competitiveness of alternative suppliers in the Queensland market. In the announcement, the ACCC stated that it had also considered significant challenges that the insurance industry is increasingly facing from extreme weather events and rising reinsurance and regulatory costs. This news comes as the ACCC considers further acquisitions of RAA by Allianz, and RAC Insurance by IAG.

IAG’s proposed acquisition of RACQ Insurance not opposed | ACCC

Zurich penalised for claims handling failure

Zurich Australia Limited (Zurich) has paid two infringement notices issued by ASIC totalling $37,560 for allegedly making false or misleading statements to two policyholders regarding their entitlement to benefit payments under their trauma insurance. The representations related to two insurance claims where Zurich declined the claim and informed the policyholders that their medical conditions were excluded under the policy, meaning no benefit was payable. Zurich later discovered that there were errors made in the claim assessments and that the exclusions did not apply. Zurich reported the matter to ASIC. Whilst the customer entitlements were eventually paid (with interest), ASIC issued infringement notices alleging that Zurich had made false or misleading statements to the policyholders. ASIC’s 2025 enforcement priorities emphasise the need to deal fairly and in good faith with customers. This action sends a clear message to other insurers that claims handling processes must not mislead customers about their entitlements under their insurance policies and that claims handlers understand the nuances in the terms of the policies they deal with.

Zurich pays two infringement notices for trauma insurance claims handling failure

Macquarie Securities sued for repeated and systemic misleading conduct

ASIC has sued Macquarie Securities (Australia) Limited, a subsidiary of Macquarie Group Limited, for misleading conduct by failing to correctly report the volume of short sales by at least 73 million for over 14 years. ASIC alleged that the misleading conduct was due to multiple systems-related issues that were largely undetected for over a decade, indicating a serious neglect for systems, operational controls and technological governance. ASIC has sought, in addition to penalties, that an independent review and assurance be undertaken on the entity’s regulatory reporting systems, controls and supervisory procedures to ensure compliance with the law. ASIC emphasised the importance of accurate short sale reporting obligations, saying that short sale data is crucial to investors, governments, regulators and financial market participants to understand market risks and support market integrity, and warned that market participants must ensure their systems, controls and governance arrangements are robust and fit for purpose to comply with their regulatory obligations.

ASIC sues Macquarie Securities for repeated and systemic misleading conduct

World's biggest insurance broker settles in fallout from Greensill Capital

Marsh McLennan has settled a lawsuit with White Oak, a US based private debt firm, in which White Oak was seeking US$143 million for allegedly fraudulent misrepresentations relating to insurance covering financial products purchased from Greensill Capital. The trial began earlier this month and uncovered knowledge within Marsh of a “frightening absence of corporate governance” with respect to Greensill’s arrangements, issues which ultimately led to the collapse of the supply chain financing company. The lawsuit was settled for an undisclosed amount. There are a number of separate lawsuits currently being undertaken in Australia, the UK and Germany relating to the Greensill collapse.

Marsh McLennan settles huge lawsuit | Insurance Business Australia

First lawsuit of a credit licensee by ASIC for hardship application failures

For the first time ever, ASIC has sued a credit licensee, Resimac Limited, for its approach to assessing hardship applications. ASIC alleges that thousands of home loan customers experiencing financial hardship were impacted by Resimac’s failure to ensure appropriate care was provided to customers when considering their hardship applications. Resimac’s approach was criticised for being “one size fits all” where extensive standard information was requested from vulnerable customers without considering their individual circumstances. ASIC alleges that Resimac’s conduct breached its obligation to act efficiently, honestly and fairly, and ASIC has urged lenders and loan managers to improve their practices for assessing hardship applications, noting that failures in the approach to support vulnerable customers can cause them to withdraw from the process and suffer significant harm. This action follows a report published by ASIC in 2024 indicating that inappropriate hardship processes caused significant harm to customers and called for greater support for customers experiencing financial hardship. 

ASIC sues home loan manager Resimac alleging failures to customers facing financial hardship

ASIC seeks leave from the High Court to appeal Block Earner decision

In the next twist of the Block Earner drama, ASIC has sought special leave from the High Court to appeal the Full Federal Court’s decision in the Block Earner case. For a quick refresher, the Full Federal Court found that the product was not a financial product and therefore, Block Earner was not engaging in unlicensed financial services by issuing the product. This itself was an appeal from the Federal Court that found the product was a financial product. ASIC considers that it is in the public interest to seek clarification from the High Court on the scope of “financial product” as defined in the Corporations Act. The High Court will consider ASIC’s application in due course, noting that ASIC had previously appealed the decision which the Full Federal Court subsequently dismissed. We will keep you updated as this case progresses.

ASIC seeks leave from High Court to appeal Block Earner decision

Key dates on the horizon

• 6 June 2025 – submissions close for APRA’s consultation on changes to its governance and fit and proper requirements.
• 10 June 2025 – By Now Pay Later (BNPL) reforms commence capturing BNPL contracts under the National Credit Code.
• *1 July 2025 – APRA prudential Standard CPS 230 commences.*
• 10 July 2025 – new broker commission consent regime commences.

In case you missed it

On Tuesday the Sparke Team gave their long-awaited webinar on CPS 230 and delegated authorities – recordings of the presentation are available to AILA Members *wink*.