Govt to consider changes to life insurance sector
Minister for Revenue and Financial Services Kelly O’Dwyer has already moved on some of the recommendations made by ASIC in its life insurance review, with a few scheduled for consideration.
Yesterday, ASIC announced the findings of its industry-wide life insurance probe, which found “significant shortcomings” in some areas of claims handling.
In a statement following the announcement, Ms O’Dwyer said the government welcomes the report and ASIC’s recommendations to address these issues.
One of those changes includes removing the current exemption for ‘insurance claims handling’ from the definition of ‘financial services’ in the Corporations Act.
“Ms O’Dwyer has asked Treasury to proceed with this recommendation and undertake targeted consultation on the merits of removing the exemption for claims handling practices,” the statement said.
ASIC has also recommended the introduction of “more significant” penalties for misconduct in relation to claims practices.
This will be considered as part of a forthcoming review of ASIC’s enforcement powers, which will be launched in the coming week, Ms O’Dwyer said.
Further, she welcomed ASIC’s and APRA’s move to begin collecting data from insurers and publish them on an ongoing basis.
This data will show rates of declined, approved and withdrawn claims; timeframes for claims decisions and details of insurance-related disputes.
“This data will be available to consumers for the first time at the individual product and distribution channel levels, providing a means for consumers to assess the claims performance of the life insurance sector,” Ms O’Dwyer said.
“While the findings of the ASIC review are welcome, there are clearly areas where the industry must do more to improve consumer outcomes and help restore public trust in the life insurance sector.”
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