(Re)Insurance and Regulation Focus - week commencing 17 August

Key developments in the last fortnight

ACCC rejects calls for standardised definitions for wear and tear

The ACCC has issued a draft decision rejecting the Insurance Council of Australia’s (ICA) proposal to introduce standardised definitions for 'wear and tear' and 'taking reasonable steps to maintain' across home insurance policies. The Regulator found the proposed wording could create consumer confusion, reduce competition between insurers, and potentially influence claims outcomes and pricing without delivering sufficient public benefit. Consumer advocates welcomed the decision, arguing that policy definitions affecting coverage should be developed independently of the industry. The outcome means insurers will continue using their own policy wording for now, although the ICA may still revise its proposal ahead of a final determination.

Draft Determination - 05.08.26 - PR - AA1000720 ICA.pdf

BEAR failure for major Australian bank

APRA’s recent enforcement action is a timely reminder that cyber resilience extends well beyond technology and into governance, accountability and risk management. Following a major cyber incident, an Australian financial institution admitted historical breaches relating to its customer authentication controls, cyber security testing and executive accountability obligations under the Banking Executive Accountability Regime (BEAR, the predecessor to FAR). APRA commenced proceedings against the bank on 10 August 2026, seeking $8 million in civil penalties. While the issues have already been remediated, APRA has stated its clear expectation that the bank should have addressed the previously identified cyber-security failures prior to the incident. It also reinforces the Regulator’s expectations that organisations must maintain strong cyber governance, clear accountability frameworks and regular assurance over critical security controls. This development sends a clear signal to accountable entities and accountable persons under FAR that governance, clear accountability frameworks and regular assurance over critical security are paramount obligations which must be upheld.

Bank admits to breaching its BEAR obligations in relation to cyber incident | APRA

Clearer explanations needed for rising motor premiums

ASIC’s latest review of the motor insurance market found that consumers are often not given clear explanations for significant increases in their car insurance premiums, despite price rises of 8% in the year to July 2025 and more than 42% between 2019 and 2024. The Regulator found that none of the insurers reviewed adequately explained how premiums were calculated or why they had changed at renewal, leaving many customers unable to assess whether to stay with their insurer or shop around. ASIC also highlighted that many consumers are unaware they could save up to 20% by paying premiums annually rather than by monthly instalments, while a large proportion do not negotiate or compare alternatives at renewal. The findings reinforce the importance of transparency and clear customer communication, particularly as insurers navigate ongoing cost pressures and increasing scrutiny of consumer outcomes.

Consumers left in the dark about rising car insurance premiums, ASIC warns | ASIC

AFCA updates approaches to three key areas

The Australian Financial Complaints Authority (AFCA) has published three new and updated approach papers covering general insurance claims handling, uninsured motorist complaints, and non-financial loss, providing greater clarity on how it assesses and resolves these types of complaints. The guidance is designed to assist consumers and financial firms to better understand AFCA’s processes and support earlier, and to enable more consistent complaint resolution. For insurers, these approach papers provide valuable insight into AFCA’s approach to key issues such as claim delays, claim denials, cash settlements and customer remediation. The approach papers come amid rising complaint volumes and increasing regulatory focus on customer outcomes and claims handling practices. The approach papers reinforce the importance of fair, transparent and well-documented decision-making throughout the claims process. They also serve as a useful benchmark for financial firms reviewing their dispute resolution frameworks and customer communication practices, informing decision-making throughout the claims process to reduce complaint volumes and improve determination outcomes.

AFCA publishes three Approaches | Australian Financial Complaints Authority (AFCA)

Key dates

• 28 August 2026 – APRA consultation on amendments to CPS 510 closes.
• 11 August 2026 – ASIC consultation on remaking financial services legislative instruments closes.
• 16 October 2026 – Consultation on Fee Transparency in Health Care closes.

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.