ob体育 has issued relief to insurers and brokers that clarifies their obligations when offering retail insurance as part of bundled business insurance contracts.
ob体育 has made a legislative instrument, , that exempts insurers and brokers from certain retail client obligations in Chapter 7 of the Corporations Act 2001 for 鈥榠ncidental retail cover鈥� provided in business insurance contracts. Incidental retail cover refers to retail insurance cover provided to a business that forms a minor, incidental and inseparable part of an otherwise wholesale insurance product. An example of incidental retail insurance is retail cover for the loss or damage of personal effects within wholesale business property insurance products that benefit a business鈥檚 employees.
ob体育 granted relief to reduce regulatory burden and provide certainty for industry that the retail client obligations do not apply to what are, in reality, business insurance products. This prevents compliance costs arising from the retail client obligations from being incurred and passed on to businesses.
The relief also includes several conditions to ensure it is appropriately targeted and that the retail covers are genuinely incidental to, and inseparable from, the wholesale insurance product. For example, when a retail cover is offered as an optional extra, when the business client makes a separate decision to purchase it or pays an additional fee, the relief will not apply.
The relief commenced on 16 August 2022 and will expire in three years. ob体育 will review the operation of the instrument before it expires.
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Background
Bundled business insurance contracts provide several types of cover that, while predominantly wholesale, may also provide cover defined as retail under the Corporations Act.
It is beneficial for insurers to be able to bundle incidental retail covers into wholesale business insurance products.
The relief was granted following an application from an insurer. ob体育 consulted with various industry, consumer and government stakeholders before deciding to grant the relief.