GUEST POST: Charmian Holmes, The Fold
Currently, managing the settlement of insurance claims is not a regulated financial service in Australia because it is excluded from the definition of ‘financial service’. This is set to change very soon as the Hayne Royal Commission has recommended that claims handling should be regulated as a financial service.
Without a doubt, third party claims administrators (TPAs) and underwriting agencies/MGAs will need to be licensed or authorised under a licence. Insurtechs and other service providers who support insurers with claims handling platforms or ‘full service’ solutions may need to assess their operations to determine whether their activities will be regulated.
Whilst it is possible to become an authorised representative of an insurer that holds an AFS licence, there are pros and cons – so it’s worth assessing the feasibility of having your own AFS licence.
Claims handling licensees will be subject to the same basic requirements as other AFS licensees, for example:
– to provide their services ‘efficiently, honestly and fairly’;
– to have adequate financial, technological and human resources; and
– to comply with financial services laws and licence conditions.
The industry is waiting to see what the change will look like and the Federal Governmenthas indicated that it will pass legislation before the end of 2019.
Don’t panic! It’s likely there will be a ‘transition period’ for licensing to allow the industry to prepare for the changes.
For more information about the regulation of claims services, click here for an article published by The Fold and Finity Consulting in their Royal Commission Response series.
The Fold Legal has handled 500+ licence applications and variations. For more information about what is involved with AFS licensing, get in touch with Charmian Holmes or Sonia Cruz – we’d be happy to help.