Thursday, December 9, 2021

“The main insurer on the latest things in the insurance industry”

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“In a relatively short period of time, many reforms have been drafted, enacted and implemented, with some goals and even conflicting effects. Moreover, the entire supply chain – product governance and design, sales, distribution, and claims and complaint management – has been affected.

Emphasizing the former senior adviser to the prime minister, he said, “Like any large-scale and complex reform exercise, there will be dental problems,” and some of the issues insurance providers are currently working on with the government would otherwise have an unintended adverse effect on our customers. ”

In Schofield’s view, all reforms and new ways of operating will take time to stabilize and integrate with each other.

Read more: Is the Australian insurance industry ready for October 05?

Allianz Australia’s chief corporate affairs official asserted: “Although some regulators may need to be repaired and maintained in the next few years for implementation and integration to take place, time is needed for the new system to take effect.

“The last thing in the insurance industry is the premature announcement that special reforms or reforms in general have failed because different metrics have not seen rapid and large movements (for example, cancellation rate or loss ratio). Can supply.
Reforms that took effect on 05 October include product design and delivery obligations (PDDOs), delayed sales models (DSMs) for add-on insurance, hawking bans, the responsibility to take reasonable care not to misrepresent, and new rules for internal dispute resolution.

Last December, the ASIC issued a 11-page guideline in the PDDO, explaining the regulator’s obligations, its general procedures for handling them, as well as the ASIC’s expectations of compliance.

Commenting on the PDDO, Schofield said Insurance business: “The impact of product design and delivery obligations will be greater on margins than having any significant or fundamental impact on insurance sales or purchases.

“Most consumers know what basic insurance products they want to buy and the key features of those products. Experience has shown that a small proportion of consumers buy or, worse, ‘sell’ products that do not suit their personal needs and circumstances. Product design and delivery obligations rely primarily on insurers and distributors to align the proposed product with customer demand and should refrain from selling it to them if they are not aligned.

Read more: Experts have explained the impact of the latest financial reforms

According to ASIC’s Regulatory Guide 274, issuers must design financial products that may be consistent with their consumer objectives, financial situation and needs. In addition, issuers should monitor consumer results and review products.

Meanwhile, at DSM, Allianz executives said: “The proposal for a delayed sales model is a response to many of the same problems and, in particular, the sale of so-called ‘add-on’ insurance products, designed to address PDDOs. Home and motor, consumers are usually familiar with the preferences of the products, brands and distribution channels available to them.There was always a question as to whether a delayed sales model was needed for such products.

“For example, what was the underlying policy that recommended to the Royal Commission that comprehensive motor insurance be exempted from the proposed DSM but for example, third party property motor insurance or boat insurance or, in that case, home and content insurance? Leave travel insurance, where customers Literally buying a travel product requires insurance coverage as well as where insurance is a recognized issue.

“Fortunately,” Schofield said, “the Treasury has acknowledged these issues and moved forward with reasonable and persuasive arguments to offer discounts for most purchased and well-understood personal insurance products.”

In July, ASIC released its regulatory guidelines and final customer information requirements as part of Watchdog’s work to implement new delayed sales models for add-on insurance.

It remains to be seen how much of an impact all changes will have on the insurance industry and consumers, according to Schofield’s advice.

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