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A client cancels her life risk policy 18 months after it was issued. The adviser received an upfront commission at the maximum rate. What must the commission arrangement provide for?
The clawback requirements in s963BA(3) of the Corporations Act 2001 (compilation 19 Sep 2026) apply where a policy is cancelled within 2 years of issue. Under ASIC Corporations (Life Insurance Commissions) Instrument 2017/510, the acceptable repayment is 100% of the benefit where the trigger event is in the first year and 60% where it occurs in the second year. Cancellation at 18 months is in the second year.
The 100% figure is for first-year cancellations; year two drops to 60%.
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