ASIC has provided conditional relief for life insurers from the design and distribution obligations (DDO) when reissuing life insurance policies in certain, limited circumstances.
The relief is set out in ASIC Corporations (Design and Distribution Obligations—Reissued Life Policies Class Exemption) Instrument 2023/183.
This relief will reduce the regulatory burden for life insurers so they can reissue pre-DDO policies in circumstances that have a low risk for consumer harm. DDO applies to financial products issued on or after 5 October 2021.
For policies issued after 5 October 2021 the relief also provides for the correction of administrative errors and reinstatement of lapsed policies.
Transactions which would involve an insurer reissuing a life policy include exercising a buy back option following payment of a claim or removing an ancillary benefit to reduce premiums.
To qualify for relief the reissued policy must:
have originally been issued before 5 October 2021, except where the policy is reissued to correct an administrative error or reinstate a lapsed policy;
have been reissued at the request of the policyholder, except where the policy is reissued to correct an administrative error;
be reissued on the same terms and conditions without additional underwriting or individual loadings, apart from changes that are necessary to give effect to the transaction; and
be issued to the same policyholder.