Draft legislation released: making insurance claims financial services
/Treasury’s draft legislation and regulations to make insurance claims handling a financial service are in the pipeline. The draft explains the ways that advice as it relates to life insurance and the claims handling process might be clarified and tightened.
The Royal Commission’s recommendations include recommendation 4.8 that states the ‘handling and settling of insurance claims, or potential insurance claims, should no longer be excluded from the definition of ‘financial services’.’
The current claims handling definition captures some financial advisers, which requires clarifying in terms of if those advisers are receiving commissions. The commissions help pay the adviser in the event of a claim.
Improved documentation is likely to be developed to ensure the handling and settling of insurance claims by insurers and insurance company representatives. Insurance company representatives may also be blocked from offering personal advice regarding insurance claims.
The Financial Planning Association of Australia (FPA) supports the new legislation.
