Australian Insurance Regulatory Landscape 2024

The Australian regulatory landscape remains turbulent and challenging, with the pace of enforcement and reform unabated and further generational regulatory change imminent. In this Insurance Regulatory Landscape 2024, we share our views on the key regulatory reforms that will shape the insurance sector in the coming year and beyond.

The global economic and political headwinds throughout 2023 have provided the impetus for an even sharper focus by Australian regulators on consumer protection measures and the protection of the prudential standing of the sector. While ASIC is now actively utilising its full regulatory ‘toolkit’ in conduct related enforcement, APRA has set its sights on elevating the standards of operational resilience which has undoubtedly been tested through the pandemic. Both regulators are charged with supervising the Financial Accountability Regime, a regime that will fundamentally expand the risk of misconduct from organisations to individuals in line with similar regimes in the UK and elsewhere.

What are some of the key trends for 2024?

• A generational regulatory change is imminent, as the Financial Accountability Regime ushers in a new age of individual responsibility for corporate misconduct of regulated insurance carriers.  All entities subject to FAR will need to be using 2024 to implement and test their FAR frameworks, to ensure they will be compliant by March 2025 when the laws come into effect.
   
• Across roughly the same period, organisations will need to materially uplift their operational resilience standards to meet the new CPS 230 requirements. This will require comprehensive reviews of supply chains, distribution networks and the contractual frameworks of organisations.
   
• Claims handling services are high on ASIC’s priority list for 2024, and it has been made clear that insurers must maintain sufficient resources to cater for natural disaster related spikes in claims handling to ensure regulatory requirements are met even in periods of extreme demand.
   
• ASIC continues to demonstrate a desire to use all available enforcement tools at its disposal, with enforcement action under the duty of utmost good faith, the general obligation of ‘honestly, efficiently and fairly’ and mechanisms such as interim stop under the design and distribution obligations regime all being deployed. The risks and consequences of non-compliance have increased, as has the manner in which regulated entities need to deal with and be prepared for regulatory engagement.
   
• Considerable changes to Australia’s privacy laws will also come into effect, significantly increasing the exposure of organisations for failings in data governance and lifting the protections and burden of compliance in Australia beyond those of the GDPR and other jurisdictions.
   
• ‘Greenwashing’ will remain a firm focus of ASIC, with prosecutions expected to rise significantly in this space as legal obligations around climate-related exposures increase, and ASIC keeps a close watch on purported ethically aligned or sustainable financial products and investments.

Click the link below to download our Australian Insurance Regulatory Landscape 2024.

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Product Regulation - Design and distribution obligations

Product Regulation - Claims handling

Product Regulation - Unfair contract terms

Product Regulation - Use of genetic testing

Product Regulation - General Insurance Pricing