Introduction

Australian insurance businesses may be required to prepare or provide disclosure documents under Chapter 7 of the Corporations Act 2001 (Cth) (‘Corporations Act’), including a Product Disclosure Statement (PDS) for retail clients, a Financial Services Guide (FSG) from the providing entity, and a Target Market Determination (TMD) made publicly available by the insurer. These documents serve different purposes, with obligations varying between insurers, brokers, distributors, retail clients and wholesale clients.

The requirements also extend to insurance policy wordings, timing, content, exemptions and website disclosure information. This article explains who prepares each document, when it must be provided, and how the rules apply to Australian insurance businesses managing insurance policies and other financial products.

Which Disclosure Documents Do Australian Insurance Businesses Need?

The disclosure documents an insurance business needs depend on its role, the insurance product and whether its clients are retail or wholesale clients. The main documents are:

• PDS: Explains the insurance product, including its features, benefits, risks and costs.
• FSG: Explains the financial services offered by an insurer, broker or other providing entity.
• TMD: Identifies the intended target market and sets out conditions governing the distribution of the insurance product.
• Other documents: Certain insurance products may require additional documents, such as Key Facts Sheets or statutory notices.

A PDS and FSG are generally given to retail clients. A TMD, by contrast, must be prepared and made publicly available, but it is not ordinarily provided to clients as a disclosure document.

Navigating Chapter 7 of the Corporations Act

Chapter 7 of the Corporations Act establishes disclosure obligations for businesses providing financial services. For insurance businesses, the main documents include:

• the PDS, prepared by the insurer or other product issuer; and
• the FSG, given by the Australian financial services (AFS) licensee or authorised representative providing the service.

Under Sections 941A and 941B of the Corporations Act, a providing entity must generally give an FSG to a retail client before providing a financial service.

Under Sections 1012A–1012C of the Corporations Act, a product issuer or seller must generally give a PDS at or before recommending, issuing or selling a financial product to a retail client.

Distinguishing Retail Versus Wholesale Insurance Obligations

Retail client status determines whether the PDS and FSG obligations apply. Section 761G(5) of the Corporations Act treats certain general insurance products as retail products, including insurance commonly used for personal purposes, such as:

• car insurance;
• home and contents insurance;
• contents insurance; or
• landlord insurance.

Wholesale clients generally do not need to receive a PDS or FSG. A broker may provide financial services as an AFS licensee or authorised representative, while the insurer usually prepares the PDS as product issuer. The providing entity remains responsible for the FSG, subject to applicable exemptions, including claims handling that does not involve representing the client in pursuing an insurance claim under Section 941C(7A) of the Corporations Act.

What Must Australian Insurers Disclose in Product Disclosure Statements?

Key Content Requirements for a Product Disclosure Statement

The insurer, as product issuer, must prepare the PDS or arrange for it to be prepared.

Under Section 1013D of the Corporations Act, the PDS must contain enough important information for a retail client to make an informed decision. Depending on the product, this includes:

• Product features, benefits and risks
• Premiums, fees, exclusions and tax implications
• Cooling-off rights, dispute resolution and access to further information

The Corporations Act also sets out specific requirements for the form and content of a PDS. The PDS must:

• identify the issuer and, for a sale PDS, the seller (Section 1013D(1)(a));
• describe significant benefits, risks and costs, including how benefits may be provided and, where relevant, factors affecting returns (Sections 1013D(1)(b)–(f));
• carry the title “Product Disclosure Statement” on the cover or at or near the front (Section 1013B(1));
• be dated (Section 1013G); and
• be worded and presented in a clear, concise and effective manner (Section 1013C(3)).

Australian Securities and Investments Commission (ASIC) Regulatory Guide 168 (RG 168.6–168.8) explains how ASIC applies these requirements in practice, including its expectations for clear, concise and effective disclosure.

PDS Timing Rules and Applicable Exemptions

As noted above, a PDS must generally be given at or before the relevant recommendation or offer. However, under Section 1012G of the Corporations Act, a PDS may be provided later in certain time-critical situations where the client expressly requests immediate advice or issue of an eligible product and the statutory conditions are met. The required product information must first be given orally under Section 1012G(3)(a). The PDS must then be provided as soon as practicable, and no later than the applicable confirmation time or the end of the fifth day after the product was issued or sold, whichever occurs first.

A PDS may not be required in limited circumstances under the Corporations Act, including:

• Existing information: reasonable grounds exist to believe the client already received or could access all required information under Section 1012D(1)–(2).
• Interim insurance: the product is an interim contract of insurance under Section 1012D(9).
• Solicited insurance calls: certain general insurance offers made during a solicited phone call meet the conditions in Section 1012GA(1).
• Renewals: the client receives a Supplementary PDS containing information not included in the original PDS.

What Must Insurance Businesses Include in a Financial Services Guide (FSG)?

Essential FSG Content for Brokers and Licensees

The FSG helps the client decide whether to obtain services from the providing entity.

Under Sections 942B and 942C of the Corporations Act, the FSG must contain information such as:

• Services: the financial services likely to be provided and the relevant financial products.
• Remuneration: commissions, benefits, referral payments and how remuneration is calculated.
• Relationships: associations or relationships with financial product issuers that could influence the service.
• Complaints: the dispute resolution system and how it can be accessed.
• Entity details: names, contact details and relevant licence or authorised representative numbers.
• Binder arrangements: if services are provided under a binder, the FSG must identify those services, state that they are provided under a binder and explain the significance of that arrangement.

The FSG must be worded and presented in a clear, concise and effective manner. It must not contain misleading or deceptive material.

FSG Timing, Exemptions and Website Disclosure Alternatives

Under Section 941D(1) of the Corporations Act, an FSG must generally be given as soon as practicable after it becomes apparent that a financial service will be provided, and before the service is provided. A later FSG may be permitted in a time-critical situation where the client requests immediate service, it is not reasonably practicable to provide the FSG beforehand, and the FSG is given as soon as practicable, no later than five days after the service.

An FSG is not required for certain services, including the claims handling and settling services exemption described above under Section 941C(7A) of the Corporations Act.

Website disclosure information may be used instead of giving an FSG for financial product advice or dealing that implements that advice. Under Section 941C(5A) of the Corporations Act and ASIC Corporations (Financial Services Guide, General Advice Warning and Advertising Related Relief) Instrument 2025/234 (‘ASIC Instrument 2025/234’), the information must:

• contain the required FSG statements;
• be readily accessible on the providing entity’s website; and
• remain up to date with the preparation or last-updated date shown.

Can Insurers Combine a PDS and FSG?

A general insurance PDS and FSG may be combined in specified circumstances. This can apply where the providing entity is the product issuer, or an authorised representative or related body corporate of the issuer, for a general insurance product. Under Regulation 7.7.08A of the Corporations Regulations 2001 (Cth) (‘Corporations Regulations’), the combined document must be divided into identifiable FSG and PDS parts, titled “Combined Financial Services Guide and Product Disclosure Statement”, and given at the earlier of the required FSG or PDS time.

What Are the Target Market Determination (TMD) Requirements for Insurers?

Understanding Part 7.8A and Section 994B

Part 7.8A of the Corporations Act requires the product issuer, including an insurer issuing the relevant insurance product, to prepare a TMD before retail product distribution conduct begins.

Under Section 994B of the Corporations Act, the TMD must:

• be in writing;
• describe the target market;
• set distribution conditions;
• identify review triggers;
• specify review periods; and
• state the information distributors must report.

A TMD must also be made publicly available free of charge under Section 994B(9) of the Corporations Act. ASIC Regulatory Guide 274 explains that public access does not make a TMD a client disclosure document. A TMD is not given to clients as a substitute for a PDS, which remains the relevant disclosure document for retail clients.

Target Markets, Distribution Conditions and Review Triggers

An insurer must describe the target market using objective characteristics connected to likely objectives, financial situation, needs, and the product’s key attributes.

In addition to the distribution conditions, review triggers and review periods described above, the TMD must state complaint reporting periods and other information required from distributors under Section 994B(5) of the Corporations Act.

Insurance brokers are not automatically responsible for preparing the insurer’s TMD. A broker acting as a distributor must take reasonable steps under Section 994E(3) of the Corporations Act to ensure retail product distribution conduct is consistent with the TMD.

Review triggers may include:

• changes to policy features;
• claim outcomes;
• lapse or cancellation rates;
• complaints; or
• distribution outside the target market.

What Other Insurance Disclosure and Policy Documents Are Required?

Policy Wordings and Insurance Contracts Act Notices

Insurance policy wordings must reflect the applicable rules under the Insurance Contracts Act 1984 (Cth) (‘Insurance Contracts Act’). Since 5 October 2021, a consumer insurance contract carries a duty to take reasonable care not to make a misrepresentation under Section 20B of the Insurance Contracts Act, rather than the traditional duty of disclosure.

The traditional duty of disclosure continues for insurance contracts that are not consumer insurance contracts under Section 21 of the Insurance Contracts Act. Under Section 22 of the Insurance Contracts Act, the insurer must clearly inform the insured in writing about the general nature and effect of that duty before the contract is entered into.

When Should Insurers and Brokers Review Their Disclosure Documents?

Insurers and brokers should review their PDSs, FSGs, TMDs and policy wordings whenever a change could affect the accuracy or completeness of the information they contain. Common review triggers include:

• changes to product features, policy terms, exclusions or benefits;
• changes to premiums, fees, excesses or other costs;
• new distribution channels, distributors, authorised representatives or binder arrangements;
• changes to the services, remuneration, associations or contact details disclosed in an FSG;
• complaints, claims outcomes or distributor reports suggesting the product is not reaching its target market; and
• changes to legislation, regulations, ASIC instruments or regulatory guidance.

For TMDs, the review should also follow the review triggers and review periods set under Section 994B(5)(d)–(f) of the Corporations Act. Under Section 994C, the insurer must review the TMD when an event or circumstance reasonably suggests that it may no longer be appropriate.

Where a document is no longer accurate, a supplementary or replacement document may be required, and financial services compliance and regulatory advice for insurers and brokers can help determine what updates are required.

Conclusion

Accurate disclosure documents help Australian insurers, brokers and distributors meet their obligations under the Corporations Act, including requirements for PDSs, FSGs and TMDs, making it sensible to contact AFSL compliance lawyers at AFSL House for insurance businesses for regulatory support. Insurance policies must also reflect the applicable requirements under the Insurance Contracts Act, including the duty to take reasonable care not to make a misrepresentation for consumer insurance contracts.

With these requirements in mind, insurers and insurance brokers can contact AFSL House for assistance drafting and reviewing PDSs, FSGs, TMDs and policy wordings. AFSL House provides clear regulatory and compliance support for accurate insurance documents, including Insurance disclosure document drafting and compliance support.

Frequently Asked Questions

Disclaimer: All information provided in this article is strictly general in nature and is not intended to be, nor should it be relied upon as, legal advice.