ASIC Review Puts Life Insurance Sector Under Scrutiny

0

ASIC Commissioner, Alan Kirkland, has communicated to industry leaders that their proactive measures in addressing these issues will be pivotal in determining ASIC's future actions, which may include investigations or enforcement measures. The review aimed to evaluate improvements in consumer outcomes following previous assessments and the implementation of recommendations from the Hayne Royal Commission.

Despite acknowledging advancements by certain firms, Kirkland emphasised that many areas still require urgent attention, particularly in direct sales channels. He advised that companies share the key findings with their boards and integrate necessary reformative actions into their operational strategies.

This development marks a critical point for consumers and the insurance industry alike. The highlighted deficiencies in selling practices and the rising disputes could erode customer trust, impacting consumer confidence and satisfaction. For businesses, the implications of increased regulatory oversight could necessitate costly adjustments and reforms to align with improved consumer protection standards. This scrutiny underscores the delicate balance between profit motives and ethical sales practices that insurers must navigate.

The life insurance sector is poised for significant changes as companies must now pivot to enhance their consumer dealings and rectify the flagged issues. This could lead to a wave of policy revisions and perhaps an industry-wide overhaul of sales incentive structures. Expert voices anticipate that ASIC will closely monitor the industry's response, with non-compliance potentially leading to stricter regulations or sanctions.

As these developments unfold, stakeholders will be watching closely to see how insurers adapt and whether these changes lead to tangible improvements in consumer protection and satisfaction.

Published:Tuesday, 26th Aug 2025
Source: Paige Estritori

Share this news item:

Insurance News

AFCA Upholds Insurer's Premium Increase Amid Consumer Complaint 01 Sep 2025: Paige Estritori A recent decision by the Australian Financial Complaints Authority (AFCA) has ruled against a homeowner seeking an $18,000 refund from Allianz. The homeowner claimed that the insurer failed to adequately inform her about substantial increases in her optional flood cover premiums. Initially, her monthly payments surged from $369 to $1277 in August 2022, a change she only noticed in March of the following year through her bank statements. - read more

Rising Group Premiums Pose Challenges for Australian Life Insurance 28 Aug 2025: Paige Estritori Insurance premiums for group life policies with long-term benefits have surged between 15% to 25% on average in the first half of the year, according to a mid-year market update from Marsh Australia. While the steepest increases affected those with adverse claims experiences, short-term rates and premiums for permanent disabilities remained relatively steady. The sector has also become more selective, with insurers adopting stricter underwriting standards, particularly eschewing high-risk industries. - read more

Concerns Arise Over Construction Code Pause Amid Housing Push 28 Aug 2025: Paige Estritori The federal government's initiative to accelerate housing development by relaxing certain building regulations has raised alarm within the insurance sector. Housing Minister Clare O’Neil announced changes on social media, indicating a strategic pause on parts of the National Construction Code to expedite building approvals and encourage the construction of much-needed homes across Australia. This move comes in response to challenges in the approval process, which often delays construction. - read more

RACQ Insurance Ordered to Increase Payout After Claim Handling Flaws 27 Aug 2025: Paige Estritori RACQ Insurance has been instructed to bolster a payout to a customer following a ruling by the Australian Financial Complaints Authority (AFCA). The dispute arose after the insurer's handling of a house fire claim lodged by a woman in October 2023 was found lacking. The fire, initiated by scented candles, resulted in significant fire and smoke damage to her home. - read more

ASIC Review Puts Life Insurance Sector Under Scrutiny 26 Aug 2025: Paige Estritori The Australian Securities and Investments Commission (ASIC) has spotlighted significant shortcomings in the direct sale of life insurance products, urging the industry to reassess its sales practices. The recent review unearthed ongoing issues with remuneration structures, indicating that some insurers still link commissions to sales targets, potentially fostering aggressive sales tactics. The study further revealed a troubling rise in claims disputes, with reported cases more than doubling since 2018, raising concerns about the transparency and trustworthiness of these policies. - read more

Ombudsman Sides with Insurer on Imposed Excess Dispute 25 Aug 2025: Paige Estritori A recent ruling by the Australian Financial Complaints Authority (AFCA) has upheld an insurer's decision to impose an additional $2000 excess on a property policy, following a dispute raised by a policyholder over claims history impacts. - read more