Important changes to your clients’ disclosure obligations

Niall McConville
Head of Retail Distribution

As you are most likely aware, recent regulatory changes have resulted in the ‘duty of disclosure’ being replaced with a ‘duty to take reasonable care not to make a misrepresentation’ when entering into, varying, extending or reinstating a consumer insurance contract.

We consider this to be an important step to ensure trust and confidence in our industry and believe this is a positive change for you and your clients.

We have adopted different implementation dates for Asteron and TAL for the following reasons:

  • For TAL customers, the change will take place on 24 September 2021, in line with the release of the latest update to our flagship retail product series, TAL Accelerated Protection. 
  • For Asteron customers, the change will occur in line with the date of the transfer of Asteron’s life insurance business to TAL on 1 October 2021. For more information about the Part 9 transfer, please visit our website.

We’re dedicated to supporting you and your clients through this change and have developed some resources to assist in explaining the new duty.

Summary of the changes

In response to the recommendations of the Financial Services Royal Commission, some important changes have been made to the Insurance Contacts Act 1984 (Cth). 

When entering into a ‘consumer insurance contract’, clients will no longer have a ‘duty of disclosure’ when applying for insurance but will have a ‘duty to take reasonable care not to make a misrepresentation’ to the insurer. In general, a misrepresentation is a false answer, an answer that is only partially true, or an answer which does not fairly reflect the truth.

To learn more about these changes and what it means for your clients, please refer to our adviser FAQ

Transitioning to the new disclosure obligations

The ‘duty to take reasonable care not to make a misrepresentation’ will now apply to all submitted applications as well as in-progress quotes and applications from the implementation date. We are committed to ensuring a smooth transition for you and your clients in both situations. 

Clients with submitted applications that are in progress on the implementation date
Importantly, your client does not need to reapply, and this change does not impact any other aspect of their application, including the quoted premium. Their application will continue to be assessed, however, instead of the ‘duty of disclosure’, the ‘duty to take reasonable care not to make a misrepresentation’ will now apply.

Clients with an application in progress on the implementation date will receive an email to explain the change, and where required, to provide a copy of the Supplementary Product Disclosure Statement (SPDS). 

As always, we’ll ensure that you are provided with a notification if you have a client who will receive this communication from us. 

Clients with in-progress quotes and applications
If you have any in-progress quotes for new Accelerated Protection policies, you will need to provide your client(s) with the relevant SPDS before their application is submitted.

You can access a copy of the SPDS for the most recent series of Accelerated Protection (PDSs dated 27 March 2020 or 1 April 2021) here.

New quotes and completed applications for new policies with an original PDS dated 1 April 2021 must be received by 30 September 2021. Beyond this date, quotes and incomplete applications will expire. 

Please note, forms used to apply for policy alterations will be updated on the TAL Adviser Centre and will refer to the ‘duty to take reasonable care not to make a misrepresentation’ from the relevant implementation date.

To learn how this change will impact in-progress quotes and applications for an alteration to a policy, please refer to the adviser FAQ.

Support for you and your clients 

To support your conversations with clients about their new disclosure obligations, here is an explanation of the ‘duty to take reasonable care not to make a misrepresentation’ and what it means for their application. We have adopted the Financial Services Council’s model explanation of the duty, to clearly outline to customers the importance of taking care to answer the questions in the application accurately.

Further information

Please refer to the adviser FAQ for further information about these changes or reach out to your local Business Development Manager or our Adviser Service Centre on 1300 351 133 (Monday to Friday 8:00am - 7:00pm AEST).
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