There is no getting away from the fact that both the real estate and insurance industries are highly regulated. Agents need to keep on top of evolving tenancy legislation and ensure they are meeting their obligations.
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry was established on the back of poor and unjust consumer experience. To enhance fairness and consumer confidence, the Royal Commission has suggested a host of regulatory and compliance changes.
Some of these changes relate to insurance and have already been implemented across the industry. For example, earlier in the year, new laws were implemented to protect consumers from unfair terms in contracts for financial products and services. With the consumer in mind, we saw the removal or qualifying of any potential ‘unfair’ terms or wording in our policies.
This didn’t have a huge impact on our agent partners, apart from them having to get their heads around changes to our PDS. However, more changes are coming from 5 October 2021, and they may impact the way we all work together.
The upcoming changes to legislation that may impact agents relate to the management of claims, a change to processes that surround disputes, and new laws that protect clients from purchasing products that are not in their best interest.
While insurance is oftentimes considered a small part of a property manager’s role, the changes in legislation that are coming may have impacts on agents who refer or distribute landlord insurance products. This is what you need to know…
- Claims as a financial service – in the past, the handling or settling of claims, or potential claims, has been excluded from being a financial service. This is set to change. Any provider offering claims handling services must do so under an Australian Financial Services License (AFSL). We work under EBM’s AFSL and are doing what is needed to ensure we are working in line with required changes. But, how does this impact agents? Well, with the change come stricter rules and regulations that property managers need to be aware of. When it comes time to chatting about the outcomes of claims, agents need to be cautious about what conversations they engage in as certain topics will be off limits. For example, you shouldn’t calculate claim settlements and advise the landlord of the payout you think they will receive. EBM RentCover will guide agents on what they can and can’t do. More to come in the coming days, weeks and months!
- Disputes and resolutions – on the back of the Royal Commission, the Australia Securities and Investments Commission laid out changes to ensure thorough and consistent industry-wide reporting of complaints and disputes. EBM RentCover takes all feedback seriously and is currently developing a thorough process for reporting and responding to complaints. NOTE: As of 5 October, all complaints should be reported to EBM RentCover within 24 hours of the feedback being raised. EBM RentCover agent partners can touch base with their Relationship Manger for more information.
- Design and Distribution Obligations (also known as DDO) – in December 2020, ASIC released its final guidance on new Design and Distribution Obligations. Since then, EBM RentCover has been working to understand exactly how this will work, the expectations on compliance and how this will be administered in the business. For those who are unaware, DDO introduces targeted design and distribution obligations in relation to financial products. The obligations require adequate frameworks to be in place to ensure products are only being sold to an appropriate market. Part of this includes developing a Target Market Determination for each of our products. Essentially, we will be creating a process that only allows people to take out cover if they fall within our target market. For example, if a landlord is looking for cover for an apartment and does not need building cover as it is already covered by strata, there will be restrictions in place to prevent them from taking out RentCover Platinum – as this product includes cover for building, it does not suit the needs of the client. The reason for Target Market Determinations is to make it easier and clear to clients what product is best suited to their needs. This puts the onus on insurers to ensure they are only delivering products to clients who really need them. We will be working with agent partners in due course to understand the Target Market Determinations and what it means when offering cover to landlords.
For EBM RentCover, the findings and changes that are occurring in the insurance industry are a welcomed move to win back public trust and for insurers to ‘do the right thing’. Coincidentally, ‘do the right thing’ is one of EBM RentCover’s values. We have always been a business that puts clients first and these reforms only support the work EBM RentCover does to ensure clients are well looked after from cover to claim.
While legislative changes can seem daunting, we aim to make it clear and concise for our agent partners. All EBM RentCover agent partners will be contacted by their Relationship Manager to ensure they are adequately trained and across the changes.
We will continue to keep our agent partners and landlords updated about changes that impact them.
*While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you need us we are here, contact 1800 661 662 if you have any questions.
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