The Australian Prudential Regulation Authority (APRA) is the main governing body that supervises insurance carriers offering life insurance policies. The agency ensures that carriers are adhering to Australia's Life Insurance Act of 1995, which was designed to reinforce the financial stability of insurance companies. This Act is for the most part a piece of legislation designed to ensure that your insurance carrier is fiscally sound, and capable of paying claims when they need to be paid.
While APRA concerns itself with making sure insurance companies are financially sound, the Australian Securities and Investments Commission (ASIC) is directly responsible for consumer protection in matters of life insurance and other financial services. APRA maintains a registry of insurance companies, and before buying a policy, you should always check to make sure that your potential insurance carrier holds an Australian Financial Services (AFS) licence.
The requirement for an AFS forms the heart of Australian consumer protection. There are six primary requirements to which carriers must adhere. An insurer must provide services with efficiency, honesty and fairness. They must also guarantee that any licensee also adhere to the rules set forth in the licensing requirement. A dispute resolution system must be in place, and the carrier must also handle client funds in accord with the Corporations Act. The carrier must comply with ASIC rules, and must also adhere to several disclosure requirements.
As a consumer, you must also receive a Product Disclosure Statement (PDS), which tells you about the costs and benefits of the insurance policy in question, any risks that may exist, and other items such as exclusions or the existence of a cooling-off period. This document must be provided to you when you are offered an insurance product.
In general, Australia has a strong base of consumer protections for those who are buying life insurance and other types of risk insurance, and although some industry groups have complained that the regulatory burden has resulted in heavy paperwork and increased premium rates, there is no doubting that Australian consumers can feel safe when purchasing a policy from a registered carrier.
The Life Insurance Act of 1945 was the beginning of national legislation regarding life insurance, and put a unifying force that standardised regulations in all territories. Legislation and consumer protections continue to be refined to this day. Today, if you have a complaint about insurance, you do have recourse. All insurers are required by statute to participate in a government-approved complaints resolution mechanism. All brokers are also required to adhere to a life insurance code, which your carrier must provide to you on request.