ASIC Considers Action as Professional Indemnity Insurance Transparency Falls Short
ASIC Considers Action as Professional Indemnity Insurance Transparency Falls Short
2
The Australian Securities and Investments Commission (ASIC) has voiced apprehension about the transparency of professional indemnity (PI) insurance amongst holders of the Australian Financial Services Licence (AFSLs).
This concern arises from a recent market overview conducted to analyze PI insurance for AFSLs offering personal advice to retail clients.
The market study revealed two primary issues: the lack of transparency in PI coverage and the extended durations required for claims resolution. In response, ASIC is exploring potential measures to address these challenges. Jared Timms, a partner at Howden Broking, emphasized the critical role of brokers in ensuring comprehensive communication with underwriters about the client's services. Timms advised against focusing solely on policy cost, noting that working with local carriers might streamline claims handling.
Since 2020, ASIC has observed a notable decline in the number of AFSLs experiencing PI-related compliance issues, including a decrease in AFSLs seeking waivers for PI requirements. The review also discovered market enhancements such as increased supply, competitive dynamics, premium reductions, and a return to profitability, signifying a recovery since the Hayne Royal Commission-induced exodus in 2019.
Despite these improvements, a Financial Services Council green paper recently critiqued ASIC's oversight on AFSL PI coverage.
The finality of PI claims and the ambiguity surrounding insurance coverage are pivotal issues for the financial services sector. Inadequate PI insurance can leave AFSLs and their clients vulnerable to financial risk, undermining trust in the financial advice industry. For consumers, clear and reliable PI coverage ensures accountability and protection, whereas for AFSLs, it represents a safeguard against claims-related financial duress.
Looking forward, ASIC's initiatives to enhance transparency and oversight, alongside evolving PI insurance market conditions, could herald substantial changes in the regulatory landscape. Expert commentary implies that aligning PI policies with client needs will remain crucial. Concurrently, the introduction of an updated Financial Advisers Register data set, from 15 August 2025, signals a strengthened compliance framework, demanding accuracy in recording adviser qualifications and pathways.
AFSLs are now mandated to update ASIC on any discrepancies within 30 business days to sidestep penalties. ASIC's spot checks have highlighted inaccuracies in the registration of financial advisers, leading to warnings and reprimands. Such compliance measures aim to uphold the regulatory integrity of AFSL operations.
Published:Tuesday, 12th Aug 2025 Source: Paige Estritori
The Australian Securities and Investments Commission (ASIC) has issued a call to action for life insurance companies, urging them to enhance their product offerings and sales processes. While acknowledging some progress since the Hayne Royal Commission, ASIC highlights ongoing issues within the industry. The regulator emphasized the importance of centering strategies around customer needs, particularly as companies aim to expand direct-to-consumer sales. - read more
The Australian Securities and Investments Commission (ASIC) has released findings from a recent review, revealing persistent deficiencies in the direct sales practices of the life insurance industry. Despite heightened scrutiny following the Hayne Royal Commission, challenges remain in several key areas, including product design, sales strategies, remuneration, and customer complaint handling. - read more
Life insurers in Australia have joined forces with mental health advocates to press the federal government to honour its $1 billion pledge for mental health initiatives. The Council of Australian Life Insurers (CALI) is among the key signatories of an open letter organized by Australians for Mental Health, urging swift action on funding allocation. - read more
The Insurance Council of Australia (ICA) has expressed strong support for a Victorian initiative proposing a resilient homes scheme, akin to those currently operating in New South Wales and Queensland. This recommendation emerged from a comprehensive inquiry into climate resilience conducted by Victoria's Legislative Council Environment and Planning Committee, which presented 93 findings alongside 82 recommendations this week. - read more
A recent ruling mandates an insurance broker to pay nearly $300,000 in compensation to a client after an insurer, QBE, declined a fire claim and cancelled the policy due to nondisclosures. The fire, which occurred in October 2022, severely damaged the commercial premises. QBE asserted that they would have denied coverage had they known about asbestos on the property, among other unreported issues. - read more
Business insurance is a vital aspect of safeguarding your company's interests and mitigating potential risks. Whether you are a small startup or a well-established organization, having appropriate insurance coverage is essential for protecting your assets, finances, and reputation. - read more
When embarking on the entrepreneurial journey of a start-up, it's imperative to safeguard the nascent enterprise with a reliable insurance safety net. Insurance acts as a vital shield, protecting the hard work and innovation of new businesses against unforeseen events and liabilities which can arise in the unpredictable world of start-ups. - read more
As a business owner, understanding the ins and outs of insurance can feel like navigating a maze. The terminology alone can be daunting, yet it's crucial to grasp these concepts to make informed decisions about protecting your enterprise. - read more
Starting a new business venture is an exciting endeavor, but amid the myriad decisions start-up founders face, one must not overlook the importance of insurance. In today's digital-first world, the potential for cyber threats is a reality that can no longer be ignored by businesses of any size or sector, especially start-ups aiming to secure their future. - read more
Business insurance is a type of coverage that protects your company from financial losses that may occur during regular operations. These losses could be due to a variety of risks like property damage, legal liability, or employee-related incidents. - read more
Knowledgebase
Reinsurance: Insurance that an insurance company purchases from another insurance company to mitigate risk.
