ASIC has announced new relief measures to make it easier for insurers to work together on residential strata insurance policies that are too large for a single insurer to cover.
When two or more insurers team up to provide cover for a single strata property, only the lead insurer will need to prepare a Product Disclosure Statement (PDS).
The lead insurer will also prepare a supplementary PDS that lists the involvement and share of the risk by any other insurers involved. These additional insurers will not need to prepare their own PDS.
This streamlined approach aims to help insurers offer cover for high-value strata properties, while also ensuring that owners’ corporations—when classified as retail clients under the Corporations Act 2001—still get the information they need about insurance arrangements.
Background
ASIC introduced these changes after receiving support from industry stakeholders during a targeted consultation.
Whether an owners’ corporation qualifies as a retail or wholesale client needs to be determined by insurers and, where relevant, brokers on a case-by-case basis.
This assessment depends on matters such as whether the insurance is provided for use in connection with a ‘small business’.
The classification of owners’ corporations as a small business depends on a range of factors such as whether they have a profit motive or generate a profit.
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ASIC is Australia’s corporate, markets and financial services regulator.