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Consultation on Deferred Sales Model for add-on insurance class exemptions—Exposure draft regulations

Submission Date: 12 August 2026

This submission has been prepared by the National Insurance Law Committee (the Committee) of the Law Council of Australia’s Legal Practice Section.

The Committee welcomes the opportunity to make a submission to The Treasury on the class exemptions for the Deferred Sales Model for add-on insurance (the DSM).

The Committee supports the policy intent of the DSM, being the prevention of pressure-selling of low-value products. Additionally, the Committee supports the continuation and extension of the class exemptions in their current form, and the form of the exposure draft.

However, the Committee urges Treasury to utilise the extension period to undertake a review of the utility of the DSM in the current regulatory environment. In the Committee's view, the misconduct sought to be addressed by the DSM is already addressed by other regulations. Chapter 7 of the Corporations Act 2001 (Cth), the design and distribution obligations (since October 2021) and other regulatory measures (including efficiently, honestly and fairly, anti-hawking prohibitions and regulations around conflicted remuneration) all substantially address the mischief the DSM was intended to remedy. Other legislation, such as the Insurance Contracts Act 1984 (Cth), with its duty of utmost good faith imposed on insurers is also relevant.

Treasury and the regulator have recognised the importance of easing the regulatory burden on business, to ensure efficiency and sustainability of the Australian financial services markets, provided consumers remain protected. In that context, a review of the effectiveness of the DSM should come before any further extensions of the class exemptions subject to this consultation.

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Last Updated on 18/08/2026

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