ASIC has remade a legislative instrument that exempts insurers and brokers from certain retail client obligations under the Corporations Act 2001, specifically when incidental retail cover is provided in wholesale insurance contracts.
The ASIC Corporations (Incidental Retail Cover) Instrument 2022/716, which was scheduled to end on 16 August 2025, will be extended for a period of five years.
ASIC granted the relief to reduce regulatory burden and provide certainty for industry that the retail client obligations do not apply to business insurance products that incidentally include retail cover. This prevents retail client compliance costs from being incurred and passed on to businesses.
ASIC assessed that the instrument was generally operating effectively and efficiently and continued to form a necessary and useful part of the legislative framework.
ASIC will continue to monitor the instrument’s appropriateness, considering ASIC’s regulatory experience and feedback from relevant stakeholders.
Background
ASIC Instrument 2022/716 commenced on 16 August 2022.
ASIC invited feedback on our proposal to remake the instrument in May 2025 and received one submission, which supported the proposal.
‘Incidental retail cover’ refers to retail insurance cover provided to a wholesale client that forms a minor, incidental and inseparable part of an otherwise wholesale insurance product. For example, retail cover for the loss or damage of personal effects within wholesale business property insurance products that benefit a business’s employees.
The relief provided through the instrument includes several conditions to ensure it is appropriately targeted and that the retail cover is genuinely incidental to, and inseparable from, the wholesale insurance product. For example, the instrument does not apply when the retail cover is offered at an optional expense, or when the wholesale client must make a separate decision to purchase it.
Under the Legislation Act 2003 (Cth), all legislative instruments are repealed automatically, or sunset, after 10 years, unless ASIC takes action to preserve them.
