Pancakes, I'm not sure about the AFS licence limitations, but...

Pancakes, I'm not sure about the AFS licence limitations, but it's certainly doubtful an AUS-purchased insurance policy would defend lawsuits brought overseas. Most likely this is where the line in the sand is drawn, and not so much in the regulatory end, and is likely also why Australian companies rarely recommend overseas products, so that the financial loss occurs here and not in Brunei for example.
It'd be a different story depending on where in the world you buy the insurance, the expertise of the insurance provider and how broadly a policy can be written is dependent on the comfort the insurer has with the software & implementation thereof.