Posted December 9, 2020
Posted By Meghann Cannon
New AFSL requirement for insurance claims handling and settling services
Prepared by Jodi Ainsworth
Currently claims handling and settling are excluded from the definition of ‘financial service’ meaning that you do not require an AFSL to provide these services. This may change from the new year, assuming the passage of a Bill which proposes to legislate a number of recommendations coming out of the Financial Services Royal Commission, including removing this claims handling exclusion.
A draft information sheet released by ASIC on 27 November 2020 sets out the proposed categories of providers who will require an Australian Financial Services Licence (AFSL) with a new claim handling authorisation from next year. These include:
- financial advisers, but only those who provide a claims handling service on behalf of an insurer; and
- claimant intermediaries who represent people to pursue insurance claims, but it is not yet apparent whether financial advisers will be excluded from this definition by regulation.
We await further clarification on the potential impact of the Bill on financial advisers given the broad definition of claimant intermediaries – the situation is presently not clear.
As things stand, ASIC propose to start accepting applications for the new claims handling authorisation from 1 January 2021. We will watch with interest and keep you updated!
ASIC’s draft information sheet is available at: https://asic.gov.au/about-asic/news-centre/find-a-media-release/2020-releases/20-300mr-asic-releases-draft-information-sheet-for-insurance-claims-handling/.