The corporate regulator has released more information to help life insurers and financial advisers adapt to new regulation when handling insurance claims.

ASIC's information sheet and consultation paper C12 Proof: Claims Handling and Settling Service Statement builds on the Financial Sector Reform (Hayne Royal Commission Response) Bill 2020.

The new law, which was introduced in parliament on November 12, will force those providing claims handling and settling services to be covered by an AFSL.

It also means that insurance-claims handling will be under the umbrella of "financial service", meaning insurers must hold an AFSL to be involved in the claims process.

Life insurers, claims managers, brokers as well as financial advisers who handle claims on behalf of an insurer will be directly impacted.

ASIC is urging industry participants to apply for the AFSL or a variation to existing licences as soon as possible.

For entities that already hold an AFSL, a variation to their licence so it covers the new financial service of claims handling and settling will be required.

To assist the industry in preparing for the new law, ASIC explains in the supplementary material how and when to apply for an AFSL or a variation to an existing AFSL.

The information sheet also explains who needs to be authorised to provide claims handling and settling services for insurance products and who can act on an AFSL's behalf.

ASIC will take applications and variations for AFSLs from 1 January 2021.

The transition period is expected to take place between 1 July 2021 and 31 December 2021.