The Australian Securities and Investments Commission (ASIC) has granted relief to life and general insurers from certain transaction confirmation requirements.
In a press release, ASIC said this relief has been set out in two separate legislative instruments with the aim of reducing regulatory burden and improving legal certainty.
The regulator also said both instruments form part of its commitment to “provide administrative relief” in specific circumstances where confirming transactions may not be appropriate or necessary.
The first relief instrument focuses on situations involving deceased life insurance policyholders.
In such cases, where the policyholder has passed away and there is no alternative holder of the policy, ASIC has determined it may not be necessary to confirm transactions with the deceased policyholder.
Explaining the rationale behind the relief, ASIC said it seeks to eliminate potential obstacles faced by insurers when providing confirmation of transactions to third-party beneficiaries who are making claims on the deceased policyholder’s life insurance policy.
Meanwhile, the second relief instrument relates to insurance benefit payments. Specifically, it facilitates life and general insurers in providing confirmation in the form of a statement before, rather than after, the transactions occur.
According to ASIC, this includes benefit payments for policyholders who are unable to work due to illness, injury, or unemployment, and applies to situations where confirmation has already been provided in the form of a statement covering future payments under the recurring benefit claim for a period of up to six months.
The statement must also comply with subsections 1017F(6)-(8) of the Corporations Act 2001, ASIC added.
These two relief measures come after transaction confirmation requirements were introduced for insurers on January 1, 2022.
The requirements mandated that insurers confirm transactions with the holder of an insurance product, including details such as the date and description of the transaction, after the transaction had occurred.
ASIC said it has granted the relief following an application submitted by the Financial Services Council (FSC). Organisations consulted on the relief include FSC, the Council of Australian Life Insurers, the Insurance Council of Australia, as well as various consumer representative bodies.
The relief is set to expire on July 1, with ASIC confirming that it will be reviewing the instruments’ operation and appropriateness before then.
Previously, ASIC granted relief to exempt insurers from certain notification obligations, including transaction confirmations, in cases where such notifications could potentially endanger victims of family violence.
