The Australian Securities and Investments Commission Act 2001(ASIC Act) is amended to implement an industry-wide deferred sales model for the sale of add-on insurance products.
Broadly, an add-on insurance product is an insurance product sold to cover risks associated with the offer or sale of a principal product or service either by the provider of the principal product or service or by a related party.
The deferred sales model separates the sale of an add-on insurance product from that of the principal product or service, and applies across all sales channels – including in person and online. The deferred sales model prohibits the sale of add-on insurance products for at least four (4) days after a customer has entered into a commitment to acquire the principal product or service.
The add-on insurance deferral period is the period of time that:
- begins at the later of:
- the time the consumer enters into the commitment to acquire the principal product or service to which the add-on insurance product relates;
- and the time the consumer is given information about the product as prescribed by ASIC;
- and ends four days later.
During the add-on insurance deferral period, a series of prohibitions apply in relation to the sale of an add-on insurance product and communicating with consumers in relation to an add-on insurance product. These prohibitions apply to both the principal provider and related third parties who sell add-on insurance products.
After the add-on insurance deferral period ends, add-on insurance products may be sold to consumers. However, communication with the consumer in forms other than writing is restricted.
The add-on insurance pre-deferral period is the period that:
- begins when the consumer indicates an intention to acquire the principal product or service;
- if there is an add-on insurance deferral period in relation to the add-on insurance product, ends immediately before the start of the add-on insurance deferral period, or otherwise does not end.
During the add-on insurance pre-deferral period, any party can communicate with the consumer about an add-on insurance, but is prohibited from selling the add-on insurance product to the consumer.
At any stage during the deferred sales model periods:
- both the principal provider and a third party may respond to consumer inquiries.
- a consumer can inform either the principal provider or a related third party that they no longer wish to receive offers, requests or invitations to purchase or apply for an add-on insurance product.
