(Re)Insurance and Regulation Focus - week commencing 25 May 2026
26 May 2026
Key developments in the last fortnight
Federal Budget impacts on the insurance sector
The 2026-2027 Federal Budget released on 12 May includes a set of measures that will have direct impacts on Australian insurers and brokers. This includes a $3.4 million, four-year allocation for Treasury targeting property insurance costs and unintentional underinsurance by introducing legislated standard definitions for natural hazard terms used in property insurance contracts, and for ASIC to maintain the North Queensland home insurance comparison website. Also, under the Budget, APRA’s delegated approval threshold for banks and insurers will double from $5 billion to $10 billion, meaning that smaller insurers pursuing transactions below that threshold will no longer need APRA sign-off, which is aimed to reduce compliance timelines and foster competition. The Budget provides for the Cyclone Reinsurance Pool guarantee to remain unchanged. In addition, both ASIC and APRA will receive increased funding to bolster their regulatory capabilities, signalling not only a higher industry levy for participants but also heavier scrutiny for the industry.
Notably, however, the Budget did not mention the Hazards Insurance Partnership which is causing some commentators to speculate as to its role in the future.
Federal budget delivers wins and gaps for the insurance sector | Insurance Business
APRA reports resilience as geopolitical and technological risks intensify
APRA has released the latest System Risk Outlook report, providing the Regulator’s perspective on risks and vulnerabilities affecting the Australian financial system. As geopolitical tensions, AI and growing complexity in global markets reshape the risk environment, APRA has intensified its oversight of banks, insurers and superannuation trustees to maintain system resilience with higher expectations for sound risk management and AI governance. APRA Chair John Lonsdale said while Australia’s financial system is well-positioned to withstand global recession, higher funding costs and operational disruptions, it requires ongoing investment in strong risk management across the system to sustain that resilience. Insurers should be prepared to uplift risk management and AI governance capabilities to cope with global market turbulence and APRA’s intensified oversight.
ASIC continues to ease regulatory burden
ASIC has released Report 830 Regulatory simplification progress report (REP 830) showing its ongoing commitment to make regulation clearer, more accessible and easier to navigate by simplifying regulatory guidance, expanding digital services capability, and streamlining its website. ASIC recognises that regulatory complexity remains a challenge and adds burdens to Australian businesses. It will now focus on the development of sector‑based regulatory roadmaps and for the next six months, and will prioritise working with APRA and other regulators to streamline and consolidate data collection requests and support the Government’s law reform to promote productivity. In 2027, ASIC will focus on delivering streamlined digital services for company registrations through the RegistryConnect program. We will provide further updates on these upcoming changes.
26-100MR ASIC continues to ease regulatory burden | ASIC
Federal Court holds superannuation entity accountable for internal dispute resolution failures
The Federal Court has found a major superannuation entity failed to comply with its internal dispute resolution (IDR) obligations, which took effect on 5 October 2021. The Court found that the entity failed to respond to a high percentage of complaints within the prescribed 45-day timeframe and for some complaints, responded more than 100 days after they were received. The entity was also found to have failed to explain the delay in responding to some complainants and failed to inform some complainants of their right to take their complaint to AFCA. This is the first case brought by ASIC regarding failures to comply with the IDR requirements, sending a clear message to all licensees that timeliness is central to effective complaint management, and providing guidance on compliance with mandatory IDR standards as well as the general licensee obligations.
Federal Court holds superannuation accountable for internal dispute resolution failures | ASIC
AFCA warns insurers as complaints surge to record 120,000
On 12 May 2026, AFCA’s Chief Customer Officer, Deborah Jenkins, delivered a keynote speech at the Claims Leaders Summit in Sydney, stating that in the first quarter of 2026, AFCA received more than 30,000 complaints across all financial products, putting the year on track for a record 120,000 complaints, up from 100,000 last year. Ms Jenkins said that claims-related complaints alone jumped 38% on the same period last year, noting the most common issues relate to delays, denials and disputes about claim amounts. The driving factors behind these surging numbers include natural disasters, supply chain disruptions and financial stresses faced by consumers. She emphasised that insurers should avoid unnecessary delays, noting that around 45% of claims complaints sent back to insurers are resolved through their internal dispute resolution processes without AFCA determinations. She encouraged insurers to work on the fundamentals in claims handling practices, including using proactive communication and improving transparency in decision making, to help relieve pressure in the system.
Claims Leaders Summit 2026 | Australian Financial Complaints Authority (AFCA)
Fewer customers impacted by Life insurance Code breaches
The Life Insurance Code Compliance Committee (Life CCC) has found life insurers reported fewer breaches and the lowest number of customers affected by breaches of the Life Insurance Code of Practice since it was first released in 2016. According to its 2024–25 Annual Industry Data and Compliance Report, the Life CCC reports reductions in overall breaches affecting large numbers of customers. Despite that, the report finds that breaches related to timely payment of income protection benefits rose significantly, and that breaches relating to providing timely initial claims information increased over the reporting period, indicating that some insurers are not meeting expectations for early, clear communication with customers. The Life CCC also reports that while aggregate complaints fell, those specifically relating to TPD have risen over consecutive years. It emphasises that insurers must ensure their systems, controls, and oversight are strong enough to prevent repeat issues and support reliable outcomes for customers, indicating that the Life CCC will continue to work with insurers to support sustained improvements in claims handling, communication, and overall Code compliance.
Fewer customers impacted by breaches, but claims issues remain a focus for life insurers – LCCC
APRA consults on changes to the National Claims and Policies Database
APRA has released a consultation on a proposal to replace the non-confidentiality determination that supports publication of aggregated statistics from the National Claims and Policies Database (NCPD). The NCPD was established by APRA in 2003 to provide insurers, the community and State and Federal Governments with a better understanding of public and products liability insurance and professional indemnity insurance, and the ability to monitor trends in premiums and claim costs. The proposal also includes changes on how NCPD statistics are published and details of the proposed refreshed publication format. The proposal also reflects APRA’s intention to include cyber insurance and management liability data as separate product classes in NCPD publications going forward. APRA invites submissions on the proposed changes until 16 June 2026.
APRA consults on changes to the National Claims and Policies Database | APRA
Tasmania pushes for TasInsure as a statutory body while ICA disagrees
The Tasmanian Government has announced that it is taking the next steps to establish TasInsure, a statutory body, intended to lower insurance costs for Tasmanians. The Premier said the Government has confirmed TasInsure would be established as a Tasmanian Government-owned, not-for-profit, statutory authority with a broad mandate to oversee and support the state's insurance ecosystem, stating that TasInsure will “focus on long-term affordability by addressing risk, prevention, resilience and increasing competition”. The Insurance Council of Australia has responded by insisting that the State's consumers and businesses already have access to a 'strong, competitive insurance market', arguing that the underlying drivers of higher insurance costs remain the cost of extreme weather risk, rising building and repair costs, compensation payouts and the burden of taxes and regulation which are already sitting with the State. The Tasmanian Government must now draft and pass legislation to formally establish TasInsure, which may take anywhere from six to twelve months from introduction to Royal Assent.
APRA and ASIC host life insurance CEO roundtable
APRA and ASIC hosted a joint life insurance CEO roundtable on 15 April 2026, which was attended by 19 life insurance CEOs and other executives, as well as representatives from Treasury and the Council of Australian Life Insurers (CALI). The roundtable discussed the growing sustainability pressures affecting total and permanent disability (TPD) insurance, with participants acknowledging that that TPD claims experience has deteriorated across both group and retail markets, which is primarily driven by the increasing incidence and complexity of mental health related claims, reducing premium affordability for consumers and increasing financial volatility for insurers. The Regulators emphasised that product design remains critical to meet the needs of consumers and will continue to support constructive industry efforts to address the sustainability challenges facing TPD insurance.
APRA and ASIC host life insurance CEO roundtable – April 2026 | APRA
Key dates
- 16 June 2026 – Submissions close on APRA’s proposed changes to the National Claims and Policies Database.
- 1 July 2026 – CPS 230 applies to existing material service provider contracts from the earlier of this date, or the next renewal date
- 1 January 2027 – proposed commencement of APRA’s targeted adjustments to the general insurance reinsurance framework.
In case you missed it
Our previous fortnightly publication containing important updates on AI-related risk management, governance, and cybersecurity.
