Understanding Informed Consent in Insurance

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Informed consent is a regulatory requirement in Australia designed to ensure clients clearly understand and agree to how insurance brokers are remunerated when personal advice is provided. As outlined in Regulatory Guide 246, informed consent promotes transparency by outlining the commission a broker may receive from an insurer and the services delivered in return across various insurance products. Consent must be obtained before a policy is placed, renewed, or materially altered where personal advice is involved and commission is payable. This ensures clients can proceed with confidence, knowing how the arrangement operates and what it means for their insurance.

What Is Informed Consent?

Informed consent refers to a retail client’s voluntary agreement allowing a broker to arrange insurance that includes commission within the premium. Importantly, under Australian Financial Services Licence (AFSL) obligations, the requirement to obtain informed consent for commissions does not apply to all insurance policies. It specifically applies to “retail clients” who are being offered retail insurance products.

As per Australian regulatory requirements, the specific retail policies subject to these consent rules include:

Home and contents insurance
Motor vehicle insurance
Sickness, accident, and health insurance
Travel insurance
Consumer credit insurance

(Note: For wholesale or commercial business policies, this specific informed consent process for commissions is generally not required, ensuring the commercial advice process remains efficient.)

For consent to be valid on these applicable retail policies, clients must:

Receive clear, balanced information
Be given adequate time to consider their decision
Act without pressure, coercion, or manipulation

While commissions have long formed part of insurance premiums and are paid by insurers rather than directly by clients, the regulatory focus now requires that this arrangement is disclosed and accepted by retail clients before proceeding, consistent with expectations set by the insurance commission framework.

Why Informed Consent Matters?

The informed consent process does not introduce new costs or fundamentally change how insurance is arranged. Instead, it strengthens disclosure practices and supports more transparent client relationships in the retail insurance space. Informed consent helps provide:

Clarity — A clear explanation of the commission structure between broker and insurer, including any third-party involvement where relevant.
Control — Flexibility for clients to decide how they engage with their broker, whether through a commission-based structure or an agreed fee-for-service model when evaluating different retail insurance products.
Confidence — Assurance that the advice process aligns with evolving legal and ethical expectations and documented client consent practices.
Commitment — Demonstrated accountability through open communication and responsible professional conduct supported by a compliant written record.

Does Informed Consent Affect Premiums?

Not necessarily. Insurance commissions have existed for decades and are typically built into the premium by the insurer. The key difference under current regulatory expectations is that brokers must now obtain the retail client’s permission for commission to be paid on the specified consumer policies.

How Consent Is Provided and Recorded

Consent may initially be provided verbally; however, it should ultimately be confirmed in writing to create a reliable record. Where verbal consent is obtained, it should be clearly documented before being formalised through written consent. Robust documentation generally includes:

Signing or digitally confirming consent helps demonstrate that the client received the necessary information, had the opportunity to ask questions, and accepted the arrangement.

Is Informed Consent a One-Off Requirement?

No. Informed consent should be reaffirmed whenever a material change occurs to your retail policy — such as a change in insurer, commission structure, or policy terms. Regular review ensures the arrangement remains transparent as circumstances evolve.

What Happens if Consent Is Not Obtained?

Regulatory obligations are clear: if consent is not provided for a relevant retail product, commission cannot be paid to the broker. In these situations, alternative options for delivering advice may be discussed so clients can determine the approach that best suits their needs.

Changing Your Mind

Clients may withdraw consent before the advice is acted upon or before commission is paid. Once commission has been lawfully earned following proper disclosure, it is generally not possible to retrospectively revoke that consent when a compliant written record exists.

Importantly, providing consent does not mean a client must accept a recommendation. Clients remain free to seek a second opinion, request further information, or take additional time before making a decision regarding recommended insurance products.

Supporting Transparent Insurance Advice

Informed consent reflects a broader shift toward clearer disclosure and stronger client engagement in financial services. By ensuring retail clients purchasing applicable retail policies understand how brokers are paid and what services are provided, the process promotes trust while supporting well-informed insurance decisions.

Clients are encouraged to ask questions at any stage and request clarification where needed. A well-managed consent process is not simply about meeting regulatory expectations — it is about enabling confident, informed participation in insurance arrangements.

Take the Next Step with FD Beck Insurance Brokers

Navigating informed consent is easier with guidance from experienced professionals. FD Beck Insurance Brokers combines long-standing industry knowledge with a commitment to transparent, client-focused advice across a broad range of insurance solutions.

Whether you are reviewing existing cover, considering new protection, or seeking clarity around broker remuneration and consent requirements, their team is ready to assist.

Speak with an FD Beck broker today to discuss your needs, ask questions, and move forward with confidence — supported by clear advice and a structured consent process designed to protect your interests.