Life insurers can now reissue pre-design and distribution obligations (DDO) policies when reissuing polices in limited circumstances after ASIC provides conditional relief to ease their regulatory burden.
“This relief will reduce the regulatory burden for life insurers so they can reissue pre-DDO policies in circumstances that have a low risk for consumer harm,” ASIC said.
DDO applies to financial products issued on or after 5 October 5, 2021. For policies issued after October 5, 2021, the relief also enables correction of administrative errors and reinstatement of lapsed policies.
Transactions, which would involve insurers reissuing life policies, include exercising buy-back options following payments of claims or removing ancillary benefits to reduce premiums.
To qualify for relief the reissued policy must:
- have originally been issued before October 5, 2021, except where the policy is reissued to correct an administrative error or reinstate a lapsed policy;
- have been reissued at the request of the policyholder, except where the policy is reissued to correct an administrative error;
- be reissued on the same terms and conditions without additional underwriting or individual loadings, apart from changes that are necessary to give effect to the transaction; and
- be issued to the same policyholder.
The instrument will expire on 16 March 2028.