The Morrison Government has made regulations that support the implementation of an industry wide deferred sales model for add‑on insurance.
Consistent with recommendation 4.3 of the Financial Services Royal Commission, on 10 December 2020 the Government passed laws that introduced a deferred sales model for add on insurance. The legislation provided for regulations to exempt a class of add‑on insurance products where it would not be appropriate that they be captured by the deferred sales model.
The regulations exempt classes of add‑on insurance products from the deferred sales regime. The exemptions ensure the deferred sales model is implemented carefully and continues to allow small businesses and consumers to access the insurance they need on a timely basis and to avoid inadvertently impacting our economic recovery from COVID‑19. The deferred sales model regime is due to commence on 5 October 2021.
The Government has exempted from the deferred sales model the following classes of insurance products: compulsory third party (CTP) insurance for motor vehicles; third party property damage, fire and theft insurance for motor vehicles and vessels; comprehensive insurance for motor vehicles and vessels; insurance sold within superannuation (including group life insurance); transport and delivery insurance product; travel insurance; home building insurance; home and contents insurance; and landlord insurance.
The deferred sales model regime is focused on protecting everyday consumers and businesses from being pressure sold add‑on products. Relief from the deferred sales model will also be provided for business related add‑on insurance products where the premium exceeds $1,000. This will ensure that the Deferred Sales Model protects businesses most at risk of being pressure sold add‑on insurance products but maintains an appropriate balance whereby larger businesses can continue purchasing add‑on insurance where it meets their business needs.
The Morrison Government remains committed to completing implementation of the Financial Services Royal Commission and in doing so ensuring Australians continue to have trust and confidence in a strong and effective financial system.