Informed Consent in Insurance Broking: What’s Changed and Why It Matters

As of 10 July 2025, a major shift has taken place in how insurance brokers operate in Australia. The Australian Securities & Investments Commission (ASIC) has introduced new informed consent obligations that directly affect how brokers disclose commissions and obtain client approval.

What Prompted the Change?

Historically, brokers disclosed commissions after a product was recommended. But ASIC’s new rules require brokers to seek client consent before receiving any commission, even if the product hasn’t been finalised. This change is designed to:

• Increase transparency
• Reduce conflicted remuneration
• Strengthen trust between brokers and clients

It’s part of a broader push to ensure clients understand not just the product, but how their broker is compensated and why that matters.

What Brokers Must Now Disclose

Before placing cover or receiving commission (ONLY IF ITS A RETAIL CLIENT, A RETAIL PRODUCT, AND PERSONAL ADVICE HAS BEEN GIVEN) , brokers must clearly explain:

• The name of the insurer (if known)
• The commission rate or range
• The frequency and duration of commission payments
• The services provided in relation to the product
• A statement that client consent is legally required
• A note that once given, consent cannot be withdrawn

This must be done in plain English, either in writing, verbally, or via a secure digital process, and documented for at least five years.

What policy types are impacted?

Under s761G of the Corporations Act 2001 and associated regulations, a retail client in general insurance is a person or small business who buys a general insurance product prescribed as retail.

A general insurance product is treated as retail when it falls into specific retail classes listed in the regulations.

The Retail Classes of General Insurance

The law says that the following insurance types are retail insurance, meaning the policyholder is automatically a retail client:

1. Motor Vehicle Insurance

For private-use or small-business use vehicles.

2. Home Building and/or Contents Insurance

4. Sickness & Accident Insurance

5. Consumer Credit Insurance

6. Travel Insurance

7. Comprehensive Motor-Cycle Insurance

8. Personal & Domestic Property Insurance (Home & Landlords etc)

✔ Anyone buying these is treated as a retail client, whether they are an individual or a qualifying small business.

What About Small Businesses?

A business can still be treated as a retail client if it buys one of the above retail insurance products, regardless of turnover or size.

For other forms of general insurance not on the retail list (e.g., commercial property, liability, marine, engineering), the client is not retail unless certain financial thresholds apply.

What This Means for Clients

For insurance broking clients, this change is empowering. It means:

• You’ll know upfront how your broker is paid
• You can make more informed decisions about your cover
• You’ll be protected from hidden incentives or biased advice

Consent Is Ongoing

This isn’t a one-time formality. Brokers must seek new consent each policy period if personal advice is provided and commission is paid. That includes renewals, changes in insurer, or updates to payment terms.

Why It’s a Good Thing

Informed consent isn’t just a compliance box, it’s a sign of a broker who values transparency and puts your interests first. It helps you:

• Understand the value of the advice you’re receiving
• Compare brokers more fairly
• Build a relationship based on trust, not assumptions