The Insurance Council of Australia (ICA) board has approved a new General Insurance Code of Practice after one of the most extensive reviews in the Code’s 25-year history. The Code will be formally launched in early 2020.
The Code sets out standards that are above and beyond legal requirements and aims to meet and anticipate consumer expectations, said the ICA last week in a statement. The Code has been comprehensively updated and rewritten to further enhance the rights and expectations that insurance customers can have about their relationship with their insurer.
ICA members and other Code participants will start to transition to it from 1 January 2020, with all Code signatories to be compliant by 1January 2021. All Code signatories will also be required to introduce and implement a publicly available policy to support customers affected by family violence by 1 July 2020.
ICA president Richard Enthoven said: “The new Code provides a significant improvement to consumer outcomes in their dealings with insurers, their distributors and their service providers.
“We now have provisions for customers experiencing vulnerability, including a requirement for signatories to have a policy to support people affected by family violence and provisions for customers who are experiencing mental health conditions.
“The insurance industry has enhanced its financial hardship provisions. The Code also provides enhanced sanction powers to the independent Code Governance Committee for breaches of the Code, and includes a community benefit payment by insurers that commit significant breaches.”
Mr Enthoven said the ICA board believed the new Code would set the benchmark for self regulation in Australia and would help the insurance sector strengthen its reputation and relationship with customers, consumer advocates, regulators and governments. “The new Code of Practice is the result of more than 2½ years of consultation and development,” he said.
“Though the review process started well before the announcement of the Financial Services Royal Commission, the Code reflects Royal Commission recommendations alongside the Code Review Final Report and reports from a range of stakeholders,” he added.
Key features of the new General Insurance Code of Practice
Plain English: A comprehensive plain-English rewrite ensures it is an easy-to-read and accessible document for consumers
Vulnerability: The revised Code includes a new section and specific provisions for customers experiencing vulnerability. This includes the requirement for firms to have a policy to support customers experiencing family violence in place by 1 July 2020, a requirement that appropriate employees are trained to understand if a customer may be vulnerable and specific provisions regarding mental health
Enhanced financial hardship provisions: Financial hardship provisions have been strengthened and include requirements for employees and agents involved in debt collection to be trained on the Financial Hardship requirements of the Code
Enhanced sanction powers for the Code Governance Committee: The revised Code has been amended to extend the CGC’s ability to sanction in the event of a Code breach. The Code has also streamlined the process the CGC needs to undertake before imposing a breach
Community benefit payment: The CGC will be able to require an insurer that has committed a significant breach to pay a community benefit payment. The payment is up to a maximum of $100,000 and will be determined in accordance with the insurer’s gross underwritten premium and number of customers. The community benefit payment is a type of sanction unique to the General Insurance Code of Practice
Cash settlements and scope of works: Subscribers will need to provide consumers with information on cash settlements so that they are better informed. A provision for scope of works similarly aims to help consumers understand this process
Investigation standards: Mandatory standards for claims investigators have been introduced. The standards include timeframes for updating a customer on the investigation process, requirements regarding requests for information and requirements as to how the investigation interview should be conducted.