Section 30 order - FAQs
On 11 August 2017, the Insurance Monitor published an order (“section 30 order”) under section 30 of the Emergency Services Levy Insurance Monitor Act 2016 (“the Act”) in the NSW Government Gazette. Guidance on the effect of the section 30 order (“Guidance”) was subsequently published on the Insurance Monitor’s website on 14 August 2017.
The following Frequently Asked Questions (“FAQs”) are provided to assist those companies which are required to comply with the order. In the following FAQs:
- a “policy” is a reference to a “regulated contract of insurance”. This is defined in the Act to mean any policy of insurance issued by an insurance company that belongs to a class of policies of insurance that are subject to contribution under the emergency services funding scheme, or is a combined or comprehensive policy of insurance that includes a policy of insurance belonging to such a class.
- A “relevant policy” is a reference to a “relevant regulated contract of insurance”, which is defined in note 12 of the Guidance as residential building insurance, residential contents insurance and any combination of the two.
- A reference to an insurance company includes those acting on behalf of the insurance company.
Frequently asked questions
The order became effective on 14 August 2017, the next business day after its publication in the NSW Government Gazette on 11 August 2017. However, the effect of the obligations in the order is suspended until 1 July 2019.
The section 30 order requires that after 1 July 2019, insurance companies will be obliged to include the information in the order, in all invoices or other statements that it issues to any person, as to the price payable for the issue of policies except for invoices or other statements issued that relate to new business or variations to existing policies. Therefore, the order relates to renewals of policies. This is referred to as the section 30 obligation.
Any order issued under section 30 of the Act applies to all relevant insurance subject to ESL contribution.
The Monitors expectations are that insurance companies will fully comply with the obligation by 1 July 2019.
Despite the suspension of the effect of the section 30 order, the Monitor identifies as best practice that insurance companies should voluntarily provide details of the prior years total premium with each subsequent renewal.
This point is emphasised in the Monitor's Guidelines on the prohibition on engaging in false and misleading conduct paragraphs 39-42 & Guideline 3 .
The Act defines an insurance company as follows:
insurance company means a person, partnership, association or underwriter that:
- issues or undertakes liability under policies of insurance against loss of or damage to property situated in New South Wales, or
- receives premiums in respect of such policies of insurance on behalf of, or for transmission to, a person, partnership, association or underwriter outside New South Wales.
Yes. In the Insurance Monitor’s view, the phrase “persons acting on behalf of an insurance company” captures insurance brokers. This is because insurance brokers, by virtue of their receipt of commissions or brokerage fees from an insurance company, as a result of placing business with that company, have a commercial relationship with the relevant insurance company. To this extent, an insurance broker may be regarded as acting on behalf of the relevant insurance company.
An insurance broker may regard themselves to be acting in the best interests of the insured, however, this does not necessarily mean that the broker is not also acting on behalf of the insurance company.
No. The any notice previously published is now withdrawn. There is no requirement to send this notice out to policyholders until 1 July 2019. However, insurance companies should have regard to and comply with the Monitor's expectations with regard to appropriate information to policyholders as set out in paragraph 42 in the Guidelines on the prohibition on engaging in false or misleading conduct in relation to emergency services levy reform, published in July 2017.
Refer to notes 5 and 6 in the Guidance. If you are already providing a renewal premium comparison details in substantially the same format as that shown under Option A when issuing a renewal policy, then Option B is available to you. In all other circumstances, you should be adopting Option A.
To provide flexibility, the information in both Options A and B can be provided on a separate page, enclosed and delivered with renewal documentation sent out to a policyholder, provided the existence of the information on the separate page is noted in the renewal documents where the premium is first mentioned.
The Insurance Monitor expects renewal premium comparisons to be shown on “like for like” basis unless there are specific problems that prevent the insurance company from doing so.
The Insurance Monitor is aware that mid-term variations and adjustments to policies may make a “like for like” comparison more difficult. Insurance companies should apply sound commercial judgment in deciding how best to provide a “like for like” comparison, that is meaningful and not misleading to the policyholder. Where considered helpful, insurance companies may include explanatory information below the renewal premium comparison to achieve this provided the explanatory information does not contradict the information in the section 30 order.
Yes. Refer note 7 of the Guidance. An insurance company may express the information in the order using alternative wording so long as the essence of the information is retained.
The Insurance Monitor expects insurance companies to achieve full compliance by 1 July 2019. Compliance checks on relevant policies will be undertaken at any time after that .
The Insurance Monitor has the discretion to take enforcement action against any non-compliance of section 30. The maximum penalty for non-compliance is set at 200 penalty points, which currently equates to $22,000. The penalty applies to each individual instance of non-compliance.