2026 marks a structural turning point for the Australian insurance sector. Regulatory expectations are no longer limited to policy frameworks and “best practice” guidance. Instead, compliance is becoming contractual, enforceable, operational and testable across insurers, MGAs, brokers and service providers.
Several forces are converging at once: APRA’s CPS 230 entering full force, ASIC sharpening its enforcement posture, and industry codes undergoing once-in-a-decade rewrites. Together, they are reshaping how risk, compliance and claims functions must operate in practice.
This article sets out the key regulatory developments shaping 2026 — and what insurance businesses need to do now to stay ahead.
A New Regulatory Baseline Is Already in Place
By the start of 2026, the industry is no longer preparing for change — it is operating inside it.
Recent reforms now form the baseline against which regulators will assess conduct, governance and outcomes, including:
- The Financial Accountability Regime (FAR), expanding individual accountability across insurers and financial services
- APRA CPS 230 – Operational Risk Management, effective from July 2025 with transitional relief ending in 2026
- Mandatory climate risk and sustainability reporting, with ASIC reviews commencing for Group 1 entities and obligations extending to Group 2
- Privacy reform, elevating expectations around data governance, breach response and cyber resilience
- The first tranche of the Quality of Advice Review, including informed consent requirements for commissions
From 2026 onward, regulators will increasingly test how these reforms are embedded into day-to-day operations — not whether policies exist on paper.
ASIC’s Regulatory Priorities: Outcomes, Disclosure and Resilience
ASIC’s priorities for 2026–2027 signal a clear enforcement trajectory for the insurance sector.
Key focus areas include:
1. Consumer Outcomes
- Claims handling timeliness and decision quality
- Internal Dispute Resolution (IDR) reporting and root-cause analysis
- Accuracy of premium disclosure and settlement practices
2. Market Disclosure and Conduct
- Sustainability and climate reporting assurance
- Conflicts of interest management, including director and officer oversight
- Advertising and promotional practices, including use of past performance
3. Digital, Data and Operational Resilience
- Outsourcing and offshoring arrangements
- Cyber and privacy risk management
- Governance over the use of AI and automated decision-making
For insurers, MGAs and brokers, this means greater scrutiny of systems, data flows, third-party arrangements and controls, not just documented frameworks.
CPS 230: Why It Matters Beyond APRA-Regulated Insurers
Although CPS 230 applies directly to APRA-regulated insurers, its impact extends well beyond them.
From 2026, insurers must ensure that all material service providers supporting critical operations are governed by legally binding contracts that meet CPS 230 minimum requirements. This includes:
- MGAs
- Claims administrators
- IT, data, and platform providers
- Outsourced operational and support functions
As a result, CPS 230 is driving:
- Widespread contractual rewrites
- Uplift of outsourcing oversight frameworks
- Deeper testing of business continuity and operational resilience
- Increased investment in cyber security and technology controls
For non-APRA entities, CPS 230 is no longer “someone else’s problem” — it is now shaping contractual risk and commercial expectations across the insurance ecosystem.
2026: The Year of Industry Code Revamps
Industry codes are moving from voluntary guidance to contractually enforceable standards. 2026 will see major changes across all three core insurance codes.
General Insurance Code of Practice (GICOP)
The rewritten GICOP, expected to be finalised in 2026, responds directly to flood inquiry findings and an independent code review. Key changes include:
- Code obligations embedded directly into insurance contracts
- Plain-language articulation of customer rights
- Mandatory standards for expert reports
- Defined expectations for extreme weather and disaster response
- A formal vulnerability framework with insurer obligations
- Standardised definitions for wear-and-tear and maintenance
- Internal consumer advocate roles within insurers
These changes significantly elevate claims handling, customer communication and governance requirements.
Insurance Brokers Code of Practice
Following extensive review, proposed changes to the Broker Code will materially affect broker operations, including:
- Broader remuneration disclosure for individuals and small businesses
- Mandated disclosure templates
- Consolidated conflict-of-interest obligations
- Enhanced vulnerability provisions
- Expanded record-keeping and audit requirements
- Longer review cycles enabling deeper thematic supervision by IBCCC
For many brokers, these changes will require operational, training and technology uplift, not just policy updates.
Life Insurance Code of Practice (LICOP)
The Life Code is also under review, with a strong focus on:
- Clarity and enforceability of commitments to consumers
- Support for vulnerable customers
- Quality and tone of claims communications
- Monitoring and enforcement mechanisms
The direction of travel is consistent across all codes: clearer obligations, stronger accountability and measurable outcomes.
What Insurance Businesses Need to Do Now
Across insurers, MGAs and brokers, 2026 readiness requires a shift from compliance assurance to contractual and operational risk management.
Priority actions include:
- Reviewing policy wordings and claims processes in light of enforceable code obligations
- Analysing complaint and IDR data to identify systemic issues early
- Testing whether existing systems can support new disclosure, reporting and vulnerability requirements
- Reviewing conflict-of-interest frameworks against updated regulatory guidance
- Embedding customer vulnerability into standard processes, not exception handling
- Assigning clear ownership for regulatory change and tracking timelines proactively
The common theme is clear: regulators are no longer asking whether you have frameworks — they are testing whether they work.
Why 2026 Is a Defining Year
2026 will be remembered as the year compliance stopped being abstract and became operational, contractual and enforceable.
For insurance businesses that invest early in clarity, systems and controls, this shift presents an opportunity: fewer surprises, stronger governance, and better customer outcomes. For those who delay, the cost of remediation — regulatory, financial and reputational — will be far higher.
The full regulatory landscape, timelines and practical considerations are detailed in the downloadable material below.
👉 Download the full regulatory overview and practical guidance 2026 01 09 - Year Ahead Webinar
Authors:
Tetiana George, CEO of Curium, Co-Chair of Insurtech Australia and member of ASIC Digital Finance Advisory Committee. LinkedIn Profile.
Yvonne Lam Partner- Corporate Insurance & Regulatory Law, Clyde & Co. LinkedIn Profile.