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) that formally came into effect on 11 February 2022.
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.
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.
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.
- 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.
