(Re)insurance and Regulation Focus - fortnight commencing 3 March 2025

Key developments over the last fortnight

ASIC looking to reduce burden of reportable situations regime

ASIC has announced plans to reduce the scope of the reportable situations regime by giving relief for certain breaches of misleading and deceptive conduct provisions and certain contraventions of civil penalties. ASIC is currently seeking feedback on the proposal that would see a generally reportable situation not be reportable where:

• the breach has been rectified within 30 days of occurrence
• the number of affected customers does not exceed five
• the total financial loss or damage does not exceed $500, and
• the breach is not a contravention of client money reporting rules and clearing and settlement rules.

ASIC stated that the “proposal seeks to strike a balance between reducing the reporting burden on licensees, while upholding the objectives of the reportable situations regime” and “encourages licensees to have good internal systems [to] detect and rectify problems”. Comments on the proposal close on 11 March 2025.

CS 16 Reportable situations – additional relief | ASIC

Coalition pledges to ease insurance industry’s capital requirements and compliance costs

In a move backed by the ICA, the coalition has announced plans to reset APRA’s statement of expectations seeking to strike a balance between its primary focus on financial system stability with the desire to access internationally competitive finance for Australian households and businesses. The move should allow insurers to avoid overcapitalisation so as to reflect the underlying risks of their portfolios with a view that such changes will lower costs for consumers and free up capital for investment. The ICA backed the move, saying that regulatory reforms over the last decade have increased cost and resource pressures on insurers, the cost of which is ultimately worn by consumers. However, actuaries from Taylor Fry criticised the move stating that cost pressures (at least for home insurance) are being driven by natural disasters and building material cost inflation with capital requirements being only a secondary factor.

Coalition flags cuts to capital, regulatory burden - Insurance News - insuranceNEWS.com.au

Add-on class action settled after four years

Suncorp has settled a class action relating to allegations of mis-selling add-on insurance products through car dealerships. The class action was brought by Maurice Blackburn Lawyers four years ago and relates to products sold through MTA Insurance and underwritten by Suncorp’s subsidiary, AAI. In settling the proceedings Suncorp denies the allegations and maintains that the settlement will not have a material financial impact on Suncorp. The settlement amount is unknown at the date of publication, but this amount will be in addition to $17.2 million (plus interest) that Suncorp has already refunded customers under an ASIC agreed remediation program in 2018.

Suncorp to settle add-on sales class action

Revolution in the way the Court approves life insurance schemes

In approving the transfer of the life insurance business from Integrity Life to AIA Australia, the Federal Court has allowed for Integrity Life policyholders to be transferred and subject to AIAA’s product terms as replacement terms. This is the first time a transfer of this nature has been attempted and typically the process would see no change, or only minor changes, to policy terms. Both parties managed to satisfy APRA and the Court that the transfer satisfied both the commercial objectives of the parties and maintained the interests of policyholders. This decision could be a moment of breaking new ground for future insurance schemes which may make the process more economically and administratively viable.

Integrity Life Australia Limited, in the matter of Integrity Life Australia Limited [2025] FCA 92

$16.8 million in fines for false or misleading statement breaches

An insurer has been fined $16.8 million for false or misleading statements regarding their consumer travel insurance products. The Supreme Court of NSW found that the insurer published statements on their domestic and international travel insurance webpages that misrepresented the characteristics and cover levels of its products. In its announcement, ASIC highlighted the need for the insurance industry to keep in mind the need for transparency and accuracy in product statements to ensure that consumers are not misled.

Allianz and AWP convicted and fined $16.8 million for making false or misleading statements

Key dates on the horizon

• *15 March 2025 – FAR: implementation in under two weeks!!!
• 21 March 2025 – APRA’s Future of Insurance 2025 Event
• 18 June 2025 – APRA 2025 Annual Business Meeting
• *1 July 2025 – APRA prudential Standard CPS 230 commences.*

In case you missed it

The Sparke Helmore team has been running Board presentations and simulation exercises relating to the upcoming commencement of the FAR to ensure that everyone is fully prepped. Please let us know if we can help your Board with FAR readiness.