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The Australian Prudential Regulation Authority (APRA) has finalised a new Information Security Prudential Standard (CPS 234) coming into effect on 1 July 2019.  CPS 234 will apply to all APRA regulated entities, including insurers. The purpose of CPS 234 is to ensure that an APRA regulated entity has measures in place to be resilient against information security incidents, including cyber-attacks. Why introduce a new prudential standard? The release of CPS 234 follows a…
Starting 1 November 2018, the Australian Financial Complaints Authority (AFCA) replaces the Financial Ombudsman Service (FOS), Credit and Investments Ombudsman (CIO) and the Superannuation Complaints Tribunal. The AFCA is now the ASIC approved External Dispute Resolution (EDR) scheme for consumer and small business complaints for Australian financial and credit industries. All financial firms should now be members of the AFCA, as the deadline to register was 21 September 2018. For insurance industry participants, this includes…
APRA has recently released the final versions of three Prudential Standards which will apply to private health insurers (PHIs) from 1 July 2019.  New versions of the following prudential standards have been released: Prudential Standard CPS 510 – Governance; Prudential Standard CPS 520 – Fit and Proper;  and Prudential Standard HPS 310 – Audit and Related Matters. APRA has also released two Prudential Practice Guides, CPG 510 and CPG 520, to help private health insurers…
When on 18 December 2017 the Commonwealth Government announced its intention to extend unfair contract term provisions to insurance contracts, the industry collectively held its breath. Of course with the Hayne Royal Commission having commenced 14 December it seemed unlikely anything further would happen during 2018. However, not being predictable, on 27 June 2018 the Department of Treasury released a proposals paper which is available here. Responses are open until 27 July 2018, leaving…
ASIC to increase surveillance to monitor compliance with PI insurance requirements AFS licensees should check their PI policy to determine whether cover is adequate Insurers should review their PI offerings to ensure cover is compliant with RG 126 Following an eight month review, ASIC has released its findings on the PI insurance market and areas of regulatory risk for AFS licensees providing financial product advice to retail clients on Tier 1 products (referred to as…
Continued market consolidation, technology driven disruption and a shift towards behavioural based conduct regulation were the standout themes in the Australian insurance sector over the last 12 months. We take a brief look at the year that was and share our thoughts on what 2016 looks like. Keep ahead or be left behind: rise of the disruptors  There is no more prescient boardroom theme than the impact of digital innovators and the growing tide of…
The Government’s response to the FSI contains both good and bad news for insurers and brokers One issue of concern is the proposal that ASIC must approve all changes in control of AFS Licensees.  This will significantly expand such regulatory oversight beyond authorised insurers to a multitude of insurance brokers and underwriting agencies. The good news In the Centre for the Study of Financial Innovation Insurance Banana Skins 2015, regulation topped the survey for the…
Credit card providers have agreed to provide customers with clearer information regarding when ‘complimentary’ travel insurance is activated and to what extent cover is provided. Many credit card holders have access to ‘complimentary’ travel insurance. However, many of these do not know that they have the benefit of cover, how to activate it, how it works or how to claim. This often gives rise to a general distrust of the cover and the purchase of…
In a move likely to be welcomed by the general insurance industry, ASIC has proposed to maintain the relief provided for distributors of general insurance products. A few short years after the introduction of the new financial services regime in Chapter 7 of the Corporations Act 2001 (Cth), ASIC began to appreciate the special nature of general insurance and the need for more streamlined and simplified distribution. As part of this recognition, relief was provided…
With the flood of recent natural disasters, APRA has clarified the type of aggregate reinsurance arrangements that require its approval.  Accordingly, it is timely for insurers to review their reinsurance arrangements to determine whether such approval is required. In recent years, Australia and New Zealand have amply demonstrated their propensity for catastrophic losses flowing from natural hazards.  This is in contrast to a period of relatively benign North American weather conditions rendering the global market…