The Australian Securities and Investments Commission (ASIC) has granted relief to exempt insurers from providing certain notifications where doing so might result in family violence.
Since January 1, 2022, insurers have been required to provide a Cash Settlement Fact Sheet (CSFS) and transaction confirmation to joint policyholders when offering to settle a claim by a cash payment. However, ASIC aims to reduce the risk of family violence resulting from insurers providing these notifications to joint policyholders.
Outlined in the legislative instrument ASIC Corporations (Cash Settlement Fact Sheet and Confirming Transactions) Instrument 2022/809, the relief will supplement commitments made in insurance industry codes of practice to customers at risk of, or experiencing, family violence. These commitments include ensuring insurers have policies, systems, and processes to identify and safely respond when they know or have reason to believe a customer is experiencing family violence.
As part of the relief, insurers will be required to keep records of the reasons for their belief that providing a CSFS and transaction confirmation will pose family violence risks for three years.
Previously, ASIC provided a temporary no-action position to credit providers and consumer lessors to protect victims of family violence regarding credit reporting requirements.
Under the Corporations Act 2001, insurers are required to give a CSFS to policyholders who are offered cash to settle some, or all, of a general insurance claim where other settlement options are available. They must also provide confirmation of a specified transaction to policyholders, including details and descriptions of the claim.
ASIC granted the relief following an application from the Insurance Council of Australia (ICA). It will expire in 2027, with the national corporate regulator vowing to review the instrument's operation and appropriateness before it expires.
