The Australian Securities and Investments Commission (ASIC) has extended the temporary regulatory relief allowing insurers to issue emergency cash payments to policyholders without requiring a Cash Settlement Fact Sheet (CSFS) upfront.
The measure, which has been in place since 2022, will now remain effective until 2030, with a revised timeframe for certain cash settlement offers.
Effective Nov. 22, insurers can make these cash payment offers within 42 days of a claimable event, expanding the current limit of 14 days.
This modification comes in response to industry feedback that consumers often face challenges lodging claims within the earlier time frame, particularly following major disasters.
The regulatory relief facilitates quick disbursements of up to $5,000 to policyholders facing urgent financial needs, bypassing the potential delays associated with preparing a CSFS.
However, insurers are still required to provide the CSFS after the emergency payment has been issued.
The relief is subject to specific criteria:
ASIC stated that the current framework will undergo further review before its expiry in 2030 to evaluate its suitability.
The CSFS disclosure requirement, implemented under the Financial Sector Reform (Hayne Royal Commission Response) Act 2020, ensures that consumers receive detailed information about settlement offers.
Introduced on Jan. 1, 2022, the requirement aims to improve transparency in claims handling by insurers.
This extension follows initial relief granted in response to an application by the Insurance Council of Australia (ICA) and stakeholder consultations.
While recent reports, including the “Flood failure to future fairness” review, have examined cash settlement practices, no adjustments to this particular relief mechanism have been proposed.
Alongside the regulatory update, ASIC has unveiled its enforcement focus for 2025, with plans to address financial conduct that disproportionately affects consumers during economic hardship.
Deputy chair Sarah Court highlighted a commitment to tackling practices that exploit vulnerabilities caused by rising living costs.
“We will focus on business models that are designed to avoid consumer credit protections, and we will take action against those engaging in unlawful debt management and collection,” she said.
