ASIC reduces administrative burden on claims handling staff

The Australian Securities and Investments Commission (ASIC) has made a legislative instrument to reduce the administrative burden on authorised general insurance industry representatives of notifying the corporate watchdog of large numbers of employees providing claims handling and settling services on their behalf.

The Financial Sector Reform (Hayne Royal Commission Response) Act 2020 established claims handling and settling as a financial service. From January 01, 2022, certain persons providing claims handling and settling services must hold an AFS licence and comply with licensee obligations under the Corporations Act 2001.

With the ASIC Corporations (Notification of Authorised Representatives) Instrument 2022/301, authorised representatives – persons and companies authorised to provide a financial service on behalf of an Australian Financial Services (AFS) licensee – do not need to notify ASIC of the sub-authorisation of employees providing claims handling and settling services on their behalf.

Read more: ASIC releases updated financial reporting requirements for AFS licensees

For example, a company authorised to conduct claims management for an insurer may sub-authorise employees without the need to notify ASIC of the authorisation, change in detail, or revocation of authorisation for each employee.

ASIC granted relief following the Insurance Council of Australia’s application for relief that prompted the corporate watchdog to seek feedback from various industry, consumer, and government stakeholders.

It explained that issuing relief to reduce the administrative burden on authorised general insurance industry representatives appointing claims handling staff does not limit the substantive obligations that authorised representatives and AFS licensees owe consumers.

Despite the changes, ASIC reassured consumers that they still have access to the internal dispute resolution processes of the AFS licensee if they have complaints about a claims handling and settling service provider or the conduct of an authorised representative or its employees.