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Reforms to add-on insurance – including a mandatory deferral period – are impacting the jewellery industry, with consumers bearing the risk of having uninsured pieces.
Reforms to add-on insurance – including a mandatory deferral period – are impacting the jewellery industry, with consumers bearing the risk of having uninsured pieces.

New jewellery insurance regulations in wake of Royal Commission

Jewellery insurance providers are adapting to fresh regulations, introduced following Kenneth Hayne QC's Royal Commission into Misconduct into Banking, Superannuation and Financial Services Industry.

The restrictions form part of the Financial Sector Reform (Hayne Royal Commission Response) Bill, passed by Federal Parliament in December 2020, and which came into effect on 5 October 2021. The restrictions are designed to prevent the ‘hawking’ of financial products, such as insurance, to retail clients for whom they were not designed.

The reforms include the introduction of a ‘deferred sales model’ for add-on insurance – defined as insurance products offered or sold in connection with the purchase of a principal good or service – in order to strengthen consumer confidence and prevent ‘pressure selling’.

Lachlan Renshaw, managing director, Centrestone Insurance
Lachlan Renshaw, managing director, Centrestone Insurance
"The intention by regulators was to protect consumers... In reality, for the jewellery industry, what this means is that if a customer comes into a jewellery store to pick up their new jewellery, they cannot insure it for four days"
Lachlan Renshaw, Centrestone Jewellery Insurance

In practice, this means that when jewellers refer a customer to an insurer, the customer “must wait four days before being able to take out the insurance,” Lachlan Renshaw, managing director of Centrestone Jewellery Insurance, told Jeweller.

“The intention by regulators was to protect consumers from being forced into insurance policies they didn’t need.

"Specifically, they named wheel-rim insurance and mobile phone insurance as products which provided little to no value to the consumer."

Renshaw added, “In reality, for the jewellery industry, what this means is that if a customer comes into a jewellery store to pick up their new jewellery, they cannot insure it for four days and the risk falls onto the customer.”

In order to address this risk, Centrestone Jewellery Insurance has introduced a complementary four-day policy for customers referred by jewellers “so there is no break in cover and the customer is insured from the moment they activate their cover with us,” Renshaw said.

The comprehensive four day policy offers all the same policy features as Centrestone Jewellery Insurance standard policy for jewellery items up to $50,000, with like-for-like replacement provided by the referring jeweller.

This offer is fully compliant with the new regulations and means that customer do not need to wait four days until obtaining cover.

Centrestone Jewellery Insurance is only available to selected jewellers via a unique jeweller portal or QR code, with customers able to scan and fill in their application via smartphone in minutes.

 

How does the sales deferral model work?

Add-on insurance is now subject to a
Add-on insurance is now subject to a 'deferred sales model'. Image credit: Deloitte

 

More reading:
Jewellers may be hit by Banking Royal Commission


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