Revamp Needed for Product Distribution, Urges ASIC
Revamp Needed for Product Distribution, Urges ASIC
The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.
The Australian Securities and Investments Commission (ASIC) has issued a stern reminder to issuers of insurance and other financial products, emphasizing the urgency to enhance their distribution practices to avoid violating compliance obligations.
Recent evaluations by the regulator unveiled significant weaknesses, including insufficient due diligence mechanisms for assessing and supervising third-party distributors, subpar consumer questionnaires, and a general lack of monitoring of consumer outcomes and product performance.
“This review offers an insight into how different industries and products are adhering to design and distribution obligations,” stated ASIC commissioner Alan Kirkland. “Where improvements can be made, we expect issuers and distributors to scrutinize the reports and elevate their distribution approaches.”
From October last year up until last month, ASIC's review covered 19 product issuers, including providers of funeral and accident insurance. The examination revealed persistent issues, particularly in funeral and accident insurance, where consumers still received quotes despite being outside the intended target market based on "knockout" question responses. Moreover, consumer questionnaires often only inquired about age, an eligibility criterion, without addressing critical affordability concerns.
Under the design and distribution obligations regime implemented since October 2021, financial product issuers are mandated to ensure their products are designed for and marketed to the correct target audience. This involves creating a target market determination statement for each product, outlining its appropriateness for the intended consumers and ensuring distribution conditions align with this target market.
“ASIC is particularly focused on fostering adherence to the design and distribution obligations,” the regulator mentioned. “We are committed to regulatory actions where necessary and leveraging these obligations to enhance consumer outcomes.”
Mr. Kirkland shared that ASIC has launched five civil proceedings related to these obligations, achieving three victories so far. Additionally, the commission has issued over 80 stop orders and published findings from seven reviews since the obligations came into effect.
Based on an article from Financial Services Online, it's clear that the current state of compliance in distribution need a proactive approach to better cater to the needs and protection of consumers. Taking heed of these regulatory insights will benefit both issuers and consumers in the long run.
Please Note: We do not endorse any specific products or companies. Some content is sourced from third parties, including press releases, and may not be independently verified for accuracy or completeness.
In June 2025, the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA) provided an update on their joint review of life insurance premium practices. This initiative was prompted by concerns over frequent and substantial premium increases that may not align with policy terms or policyholder expectations. - read more
In August 2025, the Australian Securities and Investments Commission (ASIC) released findings from a review of direct life insurance sales practices, uncovering persistent deficiencies despite previous regulatory interventions. - read more
Swiss Re Life & Health Australia has announced a suspension of new life insurance business activities in the country, effective October 2025. This decision stems from concerns over the sustainability of Total Permanent Disability (TPD) insurance products, which have seen a significant rise in claims, particularly related to mental health. - read more
Damien Mu, CEO of AIA Australia, has raised concerns about the sustainability of the current life insurance model, citing a significant increase in mental health claims and economic volatility. Speaking at the company's recent Thrive for Life presentation, Mu emphasised that the industry is facing structural changes driven by these factors. - read more
Australia's life insurance market is on a trajectory to reach $19.8 billion by 2029, according to a recent report by GlobalData. This growth is driven by a combination of demographic shifts, economic factors, and innovation in insurance products. - read more
Health insurance in Australia is a crucial aspect of ensuring you and your family receive the medical care needed without facing exorbitant costs. The healthcare system, consisting of both public and private sectors, offers various options to suit different needs and budgets. While the public sector (Medicare) provides essential services, private health insurance offers additional benefits such as faster access to services, choice of doctor, and coverage for services not included in Medicare. - read more
In Australia, health insurance plays a significant role in ensuring individuals can access quality medical care without incurring prohibitive costs. - read more
Welcome to our discussion on basic health insurance cover, a topic that is crucial yet often overlooked in the hustle and bustle of everyday life. Navigating the world of health insurance can be daunting, but understanding your options is vital for peace of mind and financial stability. - read more
Private health insurance is an essential consideration for many Australians. It provides peace of mind, knowing that you and your family have access to the best possible healthcare when needed. - read more
In today's rapidly changing health insurance landscape in Australia, keeping track of costs and coverage can be daunting. Many Australians find themselves grappling with high premiums that seem to increase year after year. - read more
Knowledgebase
Insurance Deductible: That part of an insurance claim that must be paid by an insured person before the the balance is paid by the insurer.
