During these unprecedented times, the General Insurance industry in Australia and New Zealand is beginning to see significant change to its regulatory framework.

These changes appear as a necessary adaptation to the COVID-19 pandemic and after the Insurance Council of Australia declared the pandemic a catastrophe on 11 March there is likely to be further ground breaking change given the extended nature of this crisis compared to other catastrophes.

The Reserve Bank of New Zealand was one of the first to officially implement a regulatory response to the COVID-19 pandemic on 18 March 2020:

“The Reserve Bank will delay or slow down most of its regulatory initiatives for an initial period of six months. This action is being taken to reduce the regulatory impost on financial institutions and free up Reserve Bank and industry resources to support our economy and tackle the challenges created by COVID-19.”¹

The General Insurance regulatory environment in Australia is beginning to see a similar approach after an emergency meeting of the Council of Financial Regulators (CFR) saw measures agreed in relation to the Banking and Finance sector outlining a focus on assisting vulnerable customers during the COVID-19 pandemic.

The latest CFR statement is available here.

Australian Prudential Regulation Authority (APRA)

As many insurers are already aware, APRA is requesting COVID-19 pandemic information from insurers in an effort to assist the Australian Treasury. On 23 March 2020, APRA released its adapted agenda for 2020 to put a hold on the majority of its planned regulatory initiatives and now intends to focus on the effects of the COVID-19 pandemic:

“The Australian Prudential Regulation Authority (APRA) has suspended the majority of its planned policy and supervision initiatives in response to the impact of COVID-19.

The decision is intended to allow APRA-regulated entities to dedicate time and resources to maintaining their operations and supporting customers, while also enabling APRA to intensify its focus on monitoring and responding to the impact of a rapidly changing environment on entities’ financial and operational capacity.”²

Australian Securities and Investment Commission (ASIC)

ASIC has also taken a similar approach, with immediate suspension of certain activities, including:

“consultation, regulatory reports and reviews, such as the ASIC report on executive remuneration, updated internal dispute resolution guidance and a consultation paper on managed discretionary accounts.”³

ASIC has stated that it will now focus its regulatory efforts on the challenges created by the COVID-19 pandemic until at least 30 September 2020.

Australian Financial Complaints Authority (AFCA)

AFCA has also created a hotline for complainants in light of the crisis as part of its Significant Event Response Plan. Importantly, AFCA is encouraging customers to seek assistance from businesses such as travel providers and credit card companies prior to making a travel insurance claim:

“The first step is to contact your travel agent, accommodation, airline or other transport company. Many travel service providers are offering penalty-free options for customers to amend or cancel their travel arrangements due to Coronavirus.”⁴ 

Australian Competition and Consumer Commission (ACCC)

ACCC has also adjusted its agenda towards the COVID-19 pandemic, providing information to consumers confronted with this crisis and is alert:

“to any instances of unfair or unconscionable conduct on the part of businesses in dealing with consumers during the current crisis.”⁵ 

What to Expect Going Forward

These are uncharted waters and as such insurers need to act with more caution than ever before when implementing changes in response to the pandemic.

Emergency relief legislation at both Federal and State levels is being drafted and the judicial system is adapting to social distancing measures to ensure continued access.

Although regulatory reform is being suspended by the regulators, their focus is shifting to how insurers respond in this time of significant stress.

It is important that during these unprecedented times insurers maintain dealings in the utmost good faith and be proactive in their approach to the COVID-19 pandemic. It may just be the new business as usual.

No matter what challenges we face as an industry please take care and stay safe.

¹https://www.rbnz.govt.nz/news/2020/03/regulatory-relief-to-provide-head…
²https://www.apra.gov.au/news-and-publications/apra-adapts-2020-agenda-t…
³https://asic.gov.au/about-asic/news-centre/find-a-media-release/2020-re…
⁴https://www.afca.org.au/news/significant-events/coronavirus-disease- COVID-19-outbreak-support-for-financial-issues/
⁵https://www.accc.gov.au/consumers/consumer-rights-guarantees/covid-19-c…