What Licences Do Insurance Businesses Need in Australia9 min read

Introduction

Insurance businesses in Australia may need more than one licence, depending on whether they carry insurance risk or provide financial services relating to insurance products. The two-layer structure separates the prudential role of the Australian Prudential Regulation Authority (APRA) from the conduct role of the Australian Securities and Investments Commission (ASIC), which generally involves an Australian Financial Services Licence (AFSL).

This overview is for insurers, brokers, underwriting agencies, distributors & claims handlers assessing licensing guidelines. It explains how general insurance, life insurance & private health insurance activities fit within the relevant licence, authorisation or registration requirements, while showing why there is no single insurance licence for every business.

Australian Financial Services Licence Requirements for Insurance Businesses

Issuing & Dealing in Insurance Products

A business that issues, arranges, or otherwise deals in a financial product will generally need an AFSL & may benefit from AFSL application assistance for its insurance business. Financial products include life insurance & general insurance, so an insurer or intermediary carrying out these activities may require AFSL authorisation under the financial services regime.

An AFSL authorises the licensee & its representatives to provide financial services to clients. Exemptions or a limited AFSL may apply in some circumstances, & a business may also provide services as an authorised representative of an AFSL holder.

Insurance Advice & Distribution

Providing financial product advice about insurance may require an AFSL. This includes giving a recommendation to a client or to the public about which life insurance or general insurance product to purchase.

The requirement can apply to brokers, advisers, distributors, & other intermediaries that recommend or facilitate the purchase of insurance products. The relevant activity is the provision of financial product advice, rather than the business title used by the intermediary.

Insurance Brokers & Authorised Representatives

An insurance broker may operate under its own AFSL when providing financial services relating to insurance products. A broker may also provide those services as an authorised representative of an AFSL holder.

Section 916A of the Corporations Act 2001 (‘Corporations Act‘) allows a licensee to appoint an authorised representative to provide specified financial services on the licensee’s behalf. The appropriate licensing structure depends on the services provided & the arrangement between the broker & the licensee.

Claims Handling & Settling

Claims handling & settling became a financial service on 1 January 2022 under Section 766A(1)(eb) of the Corporations Act. An entity providing this service may need an AFSL, or a variation to an existing licence, covering claims handling & settling.

The licensing position depends on the entity’s role:

• Insurer: handles claims under its own AFSL.
• Person acting for an insurer: may be covered through the insurer’s arrangements and does not automatically need a separate AFSL.
• Claimant intermediary: generally needs its own authorisation when acting for policyholders, subject to exclusions under the Financial Sector Reform (Hayne Royal Commission Response) (Claimant Intermediaries) Regulations 2021.

APRA Authorisation & Registration for Insurers

General Insurers

A business carrying on general insurance business usually requires authorisation from the APRA. Under Sections 9–10 of the Insurance Act 1973 (‘Insurance Act‘), conducting insurance business without the required authority is prohibited, while Section 12 of the Insurance Act provides for APRA authorisation of eligible corporations.

General insurance business includes undertaking liability by way of insurance for loss or damage, including reinsurance. The business may only be carried on by a corporation or a Lloyd’s underwriter, so partnerships & unincorporated entities cannot obtain this APRA authorisation.

Life Insurers

A business issuing life policies or undertaking liability under those policies requires registration as a life company. Under Section 17 of the Life Insurance Act 1995 (‘Life Insurance Act‘), a person must not intentionally carry on life insurance business in Australia unless registered to do so.

Sections 20–21 of the Life Insurance Act establish the registration framework for life companies. Life insurance business may only be carried on by corporations, so APRA cannot register a partnership or unincorporated entity for this purpose.

Private Health Insurers

A business providing private health insurance requires registration under the Private Health Insurance (Prudential Supervision) Act 2015 (‘Private Health Insurance (Prudential Supervision) Act‘). Sections 10 and 12–15 of the Private Health Insurance (Prudential Supervision) Act establish the registration regime, which applies only to corporations.

Health insurance products are excluded from the Chapter 7 financial product regime by Section 765A(1)(c) of the Corporations Act. A private health insurer therefore does not need an AFSL for its health insurance products, although an AFSL may be required for other financial products or services.

Foreign Insurers & Reinsurers

A foreign general insurer will typically operate through an APRA-authorised branch or through Lloyd’s. An unauthorised foreign insurer may operate only within limited exemptions, while reinsurance is treated as insurance business requiring authorisation under the Insurance Act.

Licensing for Brokers, Underwriting Agencies & Other Insurance Intermediaries

Insurance Brokers

Insurance brokers that advise on or arrange insurance products generally require authorisation under an AFSL, because life insurance & general insurance are financial products. As discussed above, a broker may hold its own AFSL or act as an authorised representative appointed under Section 916A of the Corporations Act. Brokers generally sit within the conduct layer because they provide services relating to an insurer’s products rather than carrying the insurance risk.

Underwriting Agencies & MGAs

Delegated underwriting authority does not make a managing general agent (MGA) or underwriting agency the insurer. An MGA or underwriting agency acting under a binder may carry out underwriting, advice or dealing activities while the insurer remains responsible for bearing the insurance risk.

Those activities still require AFSL coverage or authorised representative status. The authorised representative arrangement should also be considered against Section 916E of Corporations Act.

Insurance Distributors & InsurTech Platforms

Insurance distributors & InsurTech platforms may require an AFSL when their activities involve recommending, arranging or dealing in insurance products. A platform that recommends which policy a customer should purchase may be providing financial product advice.

A platform may also fall within the financial services regime when it facilitates the issue or purchase of general insurance or life insurance products. The required licensing position depends on the service performed, rather than the technology used to deliver it.

Claims Managers & Other Service Providers

Claims handling & settling is a financial service that may require AFSL coverage or a variation, as explained in the claims handling & settling section above. The same role-based distinction applies here: an insurer handles claims under its own AFSL, a person acting for an insurer may be covered through the insurer’s arrangements, & a claimant intermediary generally needs its authorisation, subject to the claimant intermediary exclusions.

State & Territory Insurance Schemes

Workers compensation and compulsory third party (CTP) schemes may involve separate state-based licensing or approval for participating insurers. An insurer’s federal licence or registration may not cover participation in these schemes.

The relevant licensing guidelines depend on the scheme and the state or territory in which the insurance business operates.

AUSTRAC & AML/CTF Requirements

The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (‘AML/CTF Act‘) designates services involving life insurance & sinking fund policies under Section 6(2), Table 1, items 37–39. Businesses providing those services may therefore have obligations administered by the Australian Transaction Reports and Analysis Centre (AUSTRAC).

General insurers & general insurance brokers do not need to enrol with AUSTRAC because of their general insurance activities alone. The relevant question is whether the business provides a designated service with a geographical link to Australia.

AFCA & Compensation Arrangements

An AFSL holder providing financial services to retail clients must be a member of the Australian Financial Complaints Authority (AFCA) & maintain adequate compensation arrangements under Section 912B of the Corporations Act. Professional indemnity insurance is usually used for this purpose.

Section 761G(5) of the Corporations Act treats certain general insurance products as retail products when provided to individuals or small businesses, including:

• motor vehicle, home building & home contents insurance;
• sickness & accident, consumer credit & travel insurance; and
• personal & domestic property & medical indemnity insurance.

Financial Accountability Regime

The Financial Accountability Regime (FAR) applies to APRA-regulated insurance entities & their licensed non-operating holding companies (NOHCs). For insurance entities, the regime commenced on 15 March 2025.

FAR creates responsibility & accountability requirements for relevant entities, directors & senior executives. Brokers, underwriting agencies & claims handlers are not accountable entities solely because they provide those intermediary or service-provider activities.

How to Work Out Which Insurance Licences Your Business Needs

Does the Business Carry the Insurance Risk?

A business carrying insurance risk may be an insurer requiring authorisation or registration from the APRA. General insurance business, including reinsurance, requires authority under the Insurance Act, while life insurance & private health insurance operate under separate registration regimes.

A business that does not carry the risk may instead be an intermediary acting for an insurer or customer. Brokers, underwriting agencies, distributors, & claims handlers generally assess their financial services activities rather than seeking APRA insurer status.

What Insurance Products Does the Business Deal With?

The product type helps identify the relevant licensing framework. General insurance, life insurance & private health insurance are treated differently under the applicable legislation.

• General insurance: authorisation under Insurance Act may apply.
• Life insurance: registration under Life Insurance Act may apply.
• Private health insurance: registration under Private Health Insurance (Prudential Supervision) Act may apply.

Life insurance & general insurance are financial products for AFSL purposes, while private health insurance products are excluded from the Chapter 7 financial product regime (see the private health insurers section above).

What Financial Services Does the Business Provide?

The business activity determines whether an AFSL or authorised representative arrangement may be required. The relevant activities include:

• issuing or dealing in insurance products;
• advising on or recommending insurance products;
• arranging or distributing insurance products; and
• handling & settling insurance claims.

Claims handling & settling has been a financial service since 1 January 2022; the position for insurers, people acting for insurers & claimant intermediaries is set out in the claims handling & settling section above.

Do Other Regulatory Regimes Apply?

An insurance business may need to check requirements beyond its main APRA authorisation or AFSL, with AFSL compliance and regulatory advice helping assess those overlapping obligations. The relevant regimes depend on the business structure, products, clients, & activities.

The checks may include:

• AUSTRAC obligations for designated services, including life insurance & sinking fund policies (see the AUSTRAC & AML/CTF requirements section above);
• separate state or territory approval for workers compensation or CTP schemes; and
• FAR requirements for APRA-regulated insurers & their licensed non-operating holding companies (see the FAR section above).

Conclusion

Insurance businesses do not all need the same licence in Australia because requirements depend on whether the business carries general insurance risk or provides financial services relating to insurance products. The APRA prudential layer applies to insurers, while the ASIC conduct layer may require an AFSL for brokers, distributors, underwriting agencies & claims handlers.

With that distinction in mind, contact the AFSL lawyers at AFSL House for advice on your insurance business’s AFSL application to review the licensing guidelines relevant to the business. Our NSW-based regulatory & compliance specialists can help identify the applicable APRA authorisation, registration or AFSL requirements, supporting a clearer licensing process & more informed compliance decisions.

Frequently Asked Questions