(Re)Insurance and Regulation Focus - fortnight commencing 27 April 2026

Key developments in the last fortnight

IAG-RACI proposed merger heads to Phase 2 facing ACCC scrutiny

The ACCC has taken Insurance Australia Group's proposed takeover of RAC Insurance (RACI) into an in-depth Phase 2 investigation, making it the first publicly known deal in financial services escalated to Phase 2 under Australia’s new mandatory merger clearance regime. The investigation could take up to 90 business days. The ACCC has stated that it is concerned that the proposed acquisition would combine the two biggest home and motor insurers in WA, which could have the effect of substantially lessening competition in the market. We expect the investigation will involve a forensic, evidence-heavy scrutiny of the proposed merger.

IAG's acquisition of RAC Insurance requires Phase 2 review | ACCC

ASIC releases new licensing exemptions for FFSPs

In 2025 ASIC extended transitional relief for foreign financial services providers (FFSPs) by 12 months, which exempts FFSP’s from holding an AFS license while providing certain financial services to Australian wholesale clients. This extension, together with further anticipated extensions, are intended to bridge the gap until the new statutory FFSP licensing exemption regime contained in the Treasury Laws Amendment (Genetic Testing Protections in Life Insurance and Other Measures Act 2026 (Cth) (the Act) takes effect. The Act received Royal Assent on 8 April 2026, with commencement set 12 months later in April 2027. Schedule 2 of the Act embeds three FFSP licensing exemptions directly into the Corporations Act: the comparable regulator exemption; professional investor exemption; and the market maker exemption. FFSPs currently relying on other exemptions, or transitional relief, should reassess their arrangements against the conditions attaching to each new statutory exemption prior to the April 2027 commencement date.

ASIC extends transitional relief for foreign financial services providers | ASIC

GICOP redraft: timeline slips as ICA cites ‘complex’ process

The Insurance Council of Australia (ICA) has confirmed its redraft of the General Insurance Code of Practice (GICOP) remains in consultation, with public consultation now expected in the first half of 2026, and lodgement with ASIC for approval pushed back to the second half of 2026 which is behind the timeline originally forecasted in May 2025. The redraft responds to the independent code review panel, which released a discussion paper in April 2024 and delivered its final report later that year, running in parallel with the Commonwealth Parliament’s enquiry into insurers’ responses to the 2022 floods, producing overlapping recommendations. The ICA says it is working closely with consumer advocates to sharpen obligations into clearer, contractually enforceable, plain-language terms, and has characterised the exercise as complex work requiring broad consultation, including public consultation before the GICOP redraft is finalised. Industry voices have publicly pressed for faster progress, noting that nearly two years have passed since the review began.

Code update talks continue in ‘complex’ process - Insurance News - insuranceNEWS.com.au

ACCC weights ICA’s authorising bid for standardised home insurance definitions

The ICA has lodged an authorisation application with the Australian Competition and Consumer Commission (ACCC) on 30 March 2026 seeking to introduce standardised home insurance definitions for ‘wear and tear’ and ‘reasonable steps to maintain’, alongside a proposed joint ICA-insurer education campaign in response to rising claim denials, driven by consumer confusion about maintenance obligations and the scope of exclusions. The ACCC’s public consultation was open from 2 April to 23 April, with a draft decision expected in June or July, and final determination in August or September. The Australian Consumers Insurance Lobby (ACIL) submission supports standardisation in principle, but opposes an industry-led process, arguing that Treasury or ASIC should develop the definitions, and an independent expert review of consumer impacts should precede implementation. The ACIL argues such requirements are necessary to protect the interests of consumers over insurers and eliminate the risk of the ACCC being asked to approve definitions it cannot meaningfully interrogate.

Watchdog weighs ICA’s pitch on standardised terms - Insurance News - insuranceNEWS.com.au

Key dates

• 29 May 2026 – Submissions close on APRA’s proposal to remake Level 3 conglomerate standards.
• 1 July 2026 – AML/CTF obligations commence for tranche 2 entities.
• 1 July 2026 – Mandatory climate related financial reporting annual reporting period commences for Group 2 entities.

In case you missed it

The Financial Accountability Regime commenced for insurers on 15 March 2025 and has been in-force for over a year. 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.