A TMD is a public document that describes the class of consumers a financial product is designed for, ensuring products are distributed to appropriate customers under design and distribution obligations.
A Target Market Determination (TMD) is required under the Design and Distribution Obligations (DDO) regime, which began in October 2021. Insurers must prepare a TMD for each retail insurance product.
Distributors include insurers, brokers, advisers, and comparison websites. Each must take reasonable steps to ensure products reach consumers who fit the target market.
A level-premium life insurance TMD might specify it is for consumers seeking long-term cover with stable premiums over decades. It may flag the product as not appropriate for those who only want short-term cover, or those who cannot maintain higher initial premiums.
TMDs are publicly available, usually on the insurer's website. ASIC can impose significant penalties for DDO breaches.
A funeral insurance TMD specified the product was designed for consumers aged 18-79 seeking coverage under $15,000; ASIC found it was being sold to 90-year-olds and issued penalties
An income protection insurance TMD identified employed professionals as the target market, with specific exclusions for high-risk occupations not covered by the policy
A trauma insurance TMD was updated after review data showed unusually high lapse rates among consumers aged 65+, prompting the insurer to revise the target market description and add additional pre-purchase disclosure for older applicants
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