The Government has released exposure draft legislation for consultation on measures to better align the interests of retail life insurers with consumers, consistent with the Minister for Small Business and Assistant Treasurer's announcement of 6 November 2015.
Under the proposed legislation:
- ASIC is given the power to determine in an instrument the acceptable benefits payable in relation to life risk insurance products. It is conducting its own consultation on the contents of the instrument.
- Benefits paid in relation to life risk insurance products may be recovered ('clawed back') by a life insurer from a licensee in the first two years of the policy where the policy is cancelled or not renewed, or the sum insured is decreased. Clawback will not apply in certain prescribed circumstances.
- The new legislation comes into effect on 1 July 2016, with transitional provisions until 30 June 2018.