The Australian Prudential Regulation Authority (APRA) today renewed its alert to consumers, in particular small businesses, professional associations and community groups, about the use of unauthorised foreign insurers. It urged policy-holders to examine carefully the details of policies offered by unauthorised foreign insurers and the long-term viability of the provider before taking out cover.
APRA noted that the drawbacks of buying insurance from an unauthorised foreign insurer are not always immediately obvious to consumers and strongly advises any prospective policy-holders to check the status of their proposed insurer.
Policy-holders should be aware that resolving disputes with and enforcing judgments against an unauthorised foreign insurer may be difficult. Although policy-holders may be able to resolve disputes with their broker in an Australian Court, any action for non-payment or underpayment against the insurer may have to be conducted and any judgement enforced in the insurers country of registration. In addition, unauthorised foreign insurers may operate from a jurisdiction that does not have the same legal system or regulatory controls as Australia. An unauthorised foreign issuer might subsequently prove unable or unwilling to pay a valid claim and resolving disputes or seeking compensation in a foreign jurisdiction can be slow, complex and costly.
In addition, policy-holders should know that the appointment of an authorised local broker to solicit business on behalf of the unauthorised foreign insurer does not mean that the cover provided is subject to the full protection of Australian laws and regulations.
In seeking alternatives to the use of unauthorised foreign insurers, APRA supports innovations to help make insurance more accessible and affordable for the Australian community including comprehensive tort law reform, alternative dispute resolution arrangements to avoid Court costs and delays and prudent behaviour and risk management by policy-holders.
Consumers are strongly advised to consult the full list of insurers licensed in Australia and which are subject to Australian laws and regulations at: www.apra.gov.au
