ASIC Corporations (Cash Settlement Fact Sheet) Instrument 2022/59 has been registered to exempt providing insurance claims handling services from the requirement to give a Cash Settlement Fact Sheet to the insured when a cash settlement offer is made, subject to conditions.
Division 3A of Part 7.7 of the Corporations Act deals with the requirement for an insurance claims handling and settling service to give a retail client a Cash Settlement Fact Sheet when the service is offering to settle all or part of a claim under a general insurance product using a cash payment.
The Instrument covers situations when insureds need a quick, small-moderate cash payout in urgent or emergency situations (for example, after a fire, flood, or break in and the insured needs funds to purchase essentials such as clothing or food).
It exempts the service from giving a Cash Settlement Fact Sheet at the time the offer to settle all or part of the claim using a cash payment is made provided:
(a) the client has expressly instructed the providing entity that the client is in immediate need of a cash payment because of the insurable event the subject of the claim;
(b) the cash settlement offer has been made verbally (verbal cash settlement offer) to the client no later than 14 days after the insurable event the subject of the claim;
(c) the total of the cash settlement offer does not exceed $5,000.
The service must:
(a) verbally give the client the required information at the time the verbal cash settlement offer is made; and
(b) take all reasonable steps to give the client a Cash Settlement Fact Sheet within:
(i) 48 hours of the verbal cash settlement offer being made if the Cash Settlement Fact Sheet is given electronically; or
(ii) 5 business days of the verbal cash settlement offer being made if the client has notified the providing entity they cannot or do not want to be given the Cash Settlement Fact Sheet electronically; and
(c) take all reasonable steps to make the cash payment within 2 days of the client accepting the verbal cash settlement offer; and
(d) provide the client with the right to have the accepted cash settlement offer reversed (right of reversal) on terms that include the following:
(i) the client may exercise the right of reversal up to 12 months after the date the cash payment was made;
(ii) no interest or fees on the amount of the cash payment are payable by the client.
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Author: David Jacobson
Principal, Bright Corporate Law
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About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.
