In its submission, TAL said it supports ASIC having the ability to issue guidance to the industry in regards to suitable product features and distribution requirements in particular scenarios.
TAL said ASIC could use additional product intervention powers in situations where a product is targeted at a particular segment of the population, the target segment is considered vulnerable and where a product has features that are unsuitable for certain segments of the population.
The submission recommended introducing the power to issue guidance rather than black letter regulation since this will provide “greater flexibility to respond to changing conditions while still providing consumer protection and transparency”.
In the submission, TAL referred to stepped funeral insurance premiums sold to individuals on income-tested government benefits or fixed incomes as an example of a product meeting this criteria.
“A clear body of evidence demonstrates that consumers on fixed incomes are experiencing adverse outcomes from the stepped premium structure as prices rise beyond their affordability levels and that these consumers may be better off under a level premium arrangement,” the submission stated.
“Yet yearly renewable insurance dominates funeral insurance in the Australian market.”
Funeral insurance is therefore a “suitable candidate for ASIC intervention by way of guidance”, TAL's submission concluded.
