Last week Greg Medcraft, the chairperson of the Australian Securities and Investments Commission (ASIC), delivered a speech to the Insurance Council of Australia Annual Forum on the current insurance environment and ASIC’s priorities for the coming year.
The speech commenced by noting that 2016 was an eventful year for the insurance industry.
In particular, Medcraft noted the impact of technology and social media and the impact that technology is having on consumer empowerment. Consumer expectations are changing and the impact of social media means that consumers are able to express themselves regardless of media interest.
ASIC confirmed that its investigation into life insurance (commenced during 2016) will continue in 2017 and that its focus on regulatory investigation will continue with a Senate Committee Inquiry into general insurance this year. ASIC will also review whether the unfair contract terms regime in the Australian Consumer Law should extend to insurance contracts.
Focus for 2017
Aside from collaborating with APRA on reviewing life insurance, ASIC will focus its attention on claims management in the year ahead. This will include a review of ‘add-on insurance’ such as add-ons sold through car dealers. Medcraft commented that the strategy for the coming year will be enforcement focused.
Given ASIC’s funding increase and the clear commitment to increasing enforcement, we foresee the rise of insurers facing regulatory investigation and scrutiny. ASIC will dig deeper where ‘poor culture’ raises any red flags indicating potential misconduct. Interestingly, Medcraft did not address the likely effects that changes to key insurance markets (in light of Brexit and Trump’s economic agenda) are likely to have on Australia.
In conclusion, ASIC has recommended that insurers carefully review the operation and disclosures of their schemes in light of the regulator’s priorities for the coming year. ASIC’s approach to the industry will continue to be a ‘watch this space’ for the remainder of the year. Flashlight will update further developments as they unfold.