The insurance industry in Australia has many industry specific regulatory requirements.
These can be divided into three areas:
- Prudential regulation of insurance companies in order to ensure that they have sufficient assets to satisfy all legitimate claims.
- Financial services regulation of all those advising and dealing in insurance products.
- Contractual regulation so as to ensure that there is a reasonable balance between the interests of insurance companies and all of those that they insure.
Three main bodies regulate these areas within the insurance industry:
- Australian Prudential Regulatory Authority (APRA)
- Australian Securities and Investments Commission (ASIC)
- Australian Competition and Consumer Commission (ACCC)
The prudential aspects of general and life insurance are regulated by APRA; matters relating to advice or disclosure of insurance products sold are regulated by the ASIC; and the ACCC has a regulatory role with respect to market competition and anti-competitive conduct by companies.
An outline of each regulatory body is provided below:
APRA – Australian Prudential Regulation Authority
APRA oversees banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, friendly societies and most members of the superannuation industry. APRA is funded largely by the industries that it supervises and aims to establish and enforce prudential standards and practices designed to ensure that financial promises made by institutions are met within a stable, efficient and competitive financial system.
ASIC – Australian Securities and Investment Commission
The ASIC is Australia’s corporate, markets and financial services regulator. The ASIC is an independent Commonwealth Government body that is required to ensure that Australia’s financial markets are fair and transparent, supported by confident and informed investors and consumers.
ACCC – Australian Competition and Consumer Commission
The ACCC promotes competition and fair trade in the market place to benefit consumers, businesses and the community. It also regulates national infrastructure services. Its primary responsibility is to ensure that individuals and businesses comply with the Commonwealth competition, fair trading and consumer protection laws
The ACCC enforces the Trade Practices Act 1974 (renamed the Competition and Consumer Act 2010 on January 1, 2011). It is designed to protect consumers in their dealings with business and provides a framework for
- consumer rights
- how businesses should act when selling goods and services to consumers
- steps consumers can take to resolve a problem or complaint
- how to shop safely to reduce the chance of a problem arising
Disclaimer – “This material contains general information only and may not suit your particular circumstances. To decide if a policy is right for you please carefully read the relevant Product Disclosure Statement (PDS) and/or Policy wording. While we have exercised due care and skill in preparing this information, Optimum Insurance Services (Optimum) does not accept any legal responsibility or liability for negligence or otherwise to you or anyone else who seeks to rely on this information. This includes, without limitation, loss arising from a possible failure of the information to comply with statutory or regulatory requirements or the failure of the information to identify other terms and conditions beyond those considered in this document. You should obtain advice to ensure that your policy provides adequate cover for your circumstances.
Optimum Insurance Services Pty Ltd is a Corporate Authorised Representative of Insurance Advisernet Australia Pty Ltd (Car No. 291220), Australian Financial Services Licence No 240549, ABN 15 003 886 687.”