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Do you do insurance work?

Do you do insurance work?

Those who carry out building work on behalf of insurance companies should be aware that insurance claims handling and settling services are now considered a financial service. This might mean you are subject to new obligations.

If you are carrying out a financial service in some circumstances you may need to hold an Australian Financial Service (AFS) license. 

There are two circumstances that those in the residential building industry may need an AFS license.

They are:

1. If you are a ‘claimant intermediary’

You are a ‘claimant intermediary’ if you carry on a business of representing insured people in pursuing a general insurance claim; and do so in return for any benefit (monetary or otherwise) which is given to you or a person you nominate.

2. If you are an ‘insurance fulfilment provider’

You are an insurance fulfilment provider if you provide building services to satisfy an insurers liability to an insured person; and have authority from the insurer to reject all or part of the claims.

Common examples of these circumstances are:

A claimant intermediary

Steven’s roof is damaged in a hailstorm. John approaches Steven and says he will repair the roof and handle the insurance paperwork for Steven in exchange for a fee to be paid to a company controlled by another person.

John is a claimant intermediary as he carries on a business of representing a consumer to pursue an insurance claim for a benefit, even though the benefit is not provided directly to John.

A fulfilment provider

Sam operates a building business and is an approved repairer for an insurer. Sarah makes a claim on her home and contents policy. The insurer refers Sarah to Sam.

If Sam is authorised to reject all or part of Sarah’s claim, Sam will need an AFS license. If Sam is only authorised to accept Sarah’s claim, or has no authority to accept or reject Sarah’s claim, Sam does not need an AFS license.

If it is found that you require an AFS license you will need to apply to the Australian Securities and Investment Commission for an AFS license by 30 June 2021. More information can be found at ASIC’s website where you can start your AFS licence application.

 

If you require assistance with this matter or would like additional information HIA members should contact the HIA Workplace Services team on 1300 650 620

 

Craig Jennion
HIA Executive Director – Hunter