The Australian Securities and Investments Commission (ASIC) has released new rules for retailers offering add-on insurance for purchases made by their customers.
Deputy Chair of ASIC, Karen Chester said the reforms, to come into effect on 5 October, were aimed at improving consumer outcomes in the add-on insurance market by creating a pause in the sales process to give people time to consider the insurance they had been offered and compare it with alternatives.
“It will reduce the risk of people buying insurance on the spot that is poor value or just not right for them,” Ms Chester said.
ASIC said its new regulatory guide and final customer information requirements were part of its work to implement the new deferred sales model for add-on insurance.
“The deferred sales model introduces a mandatory four-day pause between the sale of a principal product or service and the sale of add-on insurance,” ASIC said.
“The deferred sales model was introduced by Parliament in December 2020, following a recommendation of the Financial Services Royal Commission,” it said.
“The Royal Commission found numerous issues in the add-on insurance market, including poor-value products, unfair sales practices and outcomes, and worse claims outcomes than in other insurance markets.”
ASIC said it had made an instrument specifying the information that must be provided to a customer to start the four-day deferral period and how that information must be delivered.
Information for consumers about add-on insurance, including what the deferred sales model means for them, can be accessed on ASIC’s Moneysmart website at this PS News link.
