(Re)Insurance and Regulation Focus - week commencing 14 September

Key developments in the last fortnight

FAR administration streamlining

APRA and ASIC have launched a consultation on proposed changes to streamline the administration of the Financial Accountability Regime (FAR) with the aim of reducing regulatory burden while maintaining accountability standards. The proposed amendments focus on simplifying notification requirements, refining information reporting obligations, and improving the operation of the FAR register. Industry feedback is being sought until 2 October 2026, with the final changes expected to be released later in 2026 and take effect from early 2027. This initiative reflects a broader regulatory focus on making compliance processes more efficient without diluting governance expectations.

Streamlining FAR administration

ASIC warns home insurers to reduce cash settlement risks

ASIC’s review of home insurance claims, previously covered in our update for the week commencing 31 August 2026, found that cash settlements now feature in a significant majority of home building insurance claims, raising concerns about whether consumers are achieving fair outcomes. Identified risks included underpayment of repair costs, inadequate disclosure, poor support for vulnerable customers and insufficient data collection by insurers. ASIC noted that consumers are often not provided with enough information to assess whether accepting a cash settlement is in their best interests, particularly where insurer-preferred supplier quotes are used. The findings signal increased regulatory scrutiny of claims handling practices and reinforce expectations that insurers prioritise transparency, fairness and customer support throughout the claims process.

Beyond the payout: ASIC warns home insurers to reduce cash settlement risks | (Re)insurance and regulation focus – week commencing 31 August 2026

Regulators expect AI action

APRA and ASIC have delivered a clear message to the financial services sector that awareness of frontier AI risks is no longer enough. Regulators are calling on boards and executives to translate AI risk discussions into practical action, with a particular focus on cyber resilience, operational risk management, third-party dependencies, and the testing of incident response plans. Following industry roundtables involving more than 600 participants, the key takeaway was that AI is accelerating the speed and sophistication of threats, requiring organisations to strengthen governance and preparedness now, rather than waiting for a crisis to emerge.

APRA and ASIC warn frontier AI awareness must turn to action

Federal Court finds comparison service misled consumers

The Federal Court has found that an insurance comparison provider misled consumers by representing that it compared funeral and life insurance products from a range of insurers when, in reality, its comparison service largely assessed policies from a single insurer. ASIC successfully argued that consumers were given the impression that they were receiving a broad market comparison, when the available products were significantly more limited. The decision reinforces the expectation that comparison services must be transparent about the scope of products assessed and the choices genuinely available to consumers. The matter will now proceed to a further hearing dealing with penalties and other relief sought by ASIC.

Federal Court finds insurance comparison service misled consumers

Minor updates to prudential framework

APRA is consulting on a package of largely technical and administrative updates to its prudential and reporting framework across banking, insurance and superannuation sectors. The proposed changes are intended to improve clarity, consistency and reporting quality by addressing minor issues identified through supervisory experience and stakeholder feedback. While the amendments are not expected to materially alter prudential obligations, they demonstrate APRA’s ongoing efforts to keep its framework current and operationally effective. For regulated entities, the consultation serves as a reminder that incremental regulatory change remains a constant feature of the prudential landscape.

Minor updates to the prudential framework

Key dates

• 2 October 2026 – Consultation on Streamlining FAR Administration closes.
• 2 November 2026 – Final Report from Senate inquiry into greenwashing due.
• 5 – 6 November 2026 – ICA Annual Conference.
• 17 – 18 November 2026 – ASIC Annual Forum.

In case you missed it

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.