Module Application
- Does your organisation enter contracts of insurance in relation to life or general insurance in Australia?
- Does your organisation have prudential obligations relating to how it should address risk management?
- Does your organisation have prudential obligations relating to how it should prepare for and address serious financial stress that will impact policy holders?
- Does your organisation seek to transfer or amalgamate its insurance business?
Module Scope
This module contains the requirements for a general insurer and a life company (collectively, the insurer) where they provide insurance services to customers in Australia, together with guidance on how to manage their insurance business, as well as meet certain prudential obligations. Most of the requirements are shared by general insurers and life companies.
The module focuses on the obligations owed by an insurer under the Insurance Contracts Act 1984 (Cth) and related regulations, and contains the requirements in relation to:
- Contracts of insurance, specifically:
- Administrative issues relating to insurance contracts and the provision of the requisite information to ASIC
- Disclosure obligations, including key fact sheets, disclosure duty for both consumer and non-consumer contracts
- Contract provisions that must be included and addressed
- Claims obligations including procedures in relation to the refusal to pay claims, interest on claims and unclaimed moneys
- Required information, notices (and for general insurers) cash settlement fact sheets)
- Expiration, renewal and cancellation
- Subrogation (General insurance only)
- Privacy and recordkeeping, covering preservation requirements and matters specific to health records
- Customer issues such as payment, fees and discrimination
- Insurer obligations in relation to consumer credit insurance
- Prudential requirements relating to an insurer’s obligations covering:
- Risk management frameworks
- Recovery and exit planning
- Resolution planning
- Transfer and amalgamation of an insurance business
Significant consequences can apply to insurers found to have breached or not complied with their legal obligations. These consequences vary considerably depending on the nature and extent of the breach or failure. The Insurance Contracts and Operations module covers specific consequences in detail. They can include monetary penalties, disciplinary measures and even terms of imprisonment for individuals found to have committed serious criminal offences.
The Insurance Contracts and Operations module does not cover the rights or entitlements of individuals who have suffered damages or losses due to breaches of obligations by insurers. The module does not cover the process that an entity or an individual would follow to report or seek compensation for the breach or their loss.
The module is relevant to both an authorised general insurer and a life company operating in Australia. The module does not include the obligations related to obtaining and maintaining an Australian Financial Services licence which, while required by an insurer, is the subject of the Australian Financial Services licence module.