ASIC streamlines process for insurers to provide consumers cash in emergency situations

ASIC has issued legislative relief that allows insurers to give emergency payments to consumers in certain circumstances without first giving them a Cash Settlement Fact Sheet (CSFS).

The relief formally came into effect on 11 February 2022. Insurers can apply the streamlined process to emergency payments for insured consumers impacted by the current catastrophic severe weather and flooding in Queensland and Northern NSW.

A CSFS is a written document that insurers must give to consumers when they are offered a cash settlement, setting out the options available to settle their claim. A CSFS must outline the options available to a consumer, for example having their goods repaired or replaced, or receiving a cash payment.

The relief streamlines the process for insurers to advance consumers up to $5,000 in cash in emergency situations without first having to issue a CSFS. Having to provide a written CSFS when a cash settlement of up to $5,000 is offered may delay payments to consumers who need immediate access to small amounts of cash in urgent or emergency situations.

The relief applies in limited circumstances where:

  • the consumer has expressly instructed the insurer or its representative that they need immediate financial assistance
  • the verbal cash settlement offer has been made within 14 days of the insurable event that is the subject of the claim, and
  • the cash payment (together with any additional immediate cash payments under the same claim) does not exceed $5,000.

The relief is subject to conditions and will expire in 2025. ASIC will review the operation and appropriateness of the instrument before it expires.

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