News eDaily04 Jul 2017

Australia:Committee formed to oversee breakthrough Life Insurance Code of Practice

04 Jul 2017

The Financial Services Council (FSC) has established the Life Code Compliance Committee (LCCC), an independent body responsible for ensuring member compliance with the industry's first ever Life Insurance Code of Practice for consumers, which came into effect on 1 July.

Administered by the Financial Ombudsman Service, the Committee comprises a representative from industry, a consumer representative and an independent chair.

LCCC members are:

  • Prof David Weisbrot (chair) who is a Fellow of the Australian Academy of Law and an Emeritus Professor of Law and Honorary Professor of Medicine at the University of Sydney;
  • Mr David Goodsall who is a Fellow and Past President of the Institute of Actuaries of Australia, and a Fellow of the Australian Institute of Company Directors; and
  • Ms Alexandra Kelly who is the principal solicitor of the New South Wales-based Financial Rights Legal Centre.

The Code of Practice regime sets a foundation of new minimum standard medical definitions for cancer, heart attack and stroke for use in trauma/critical illness policies. The new definitions have been developed with the assistance of medical professionals and will be under continual review to ensure they are in keeping with advancements in medical science.

The Code itself was developed by the FSC through extensive public consultation and is mandatory for FSC life insurance members. Presented in plain language, it provides strong consumer protections and sets high standards of customer service. It covers all aspects of interactions with consumers from product design, buying insurance, regular communications and making claims. The Code requires insurers to improve disclosure to customers, provide greater transparency in communications, decide claims within set timeframes, limit the use of surveillance and provide additional support for vulnerable consumers.

Non-compliance with the Code can result in strong sanctions.

FSC CEO Sally Loane said: “The Life Insurance Code of Practice demonstrates the life insurance industry’s commitment to improving standards and strengthening consumer protections. This document is a clear declaration of the level of service consumers can expect from life insurers in language they can understand.”

The establishment of the Code was a recommendation of the 2015 Trowbridge Review into the life insurance sector. This review has resulted in significant industry reforms designed to improve consumer outcomes.

The FSC has over 100 members representing Australia's retail and wholesale funds management businesses, superannuation funds, life insurers, financial advisory networks and licensed trustee companies. The industry is responsible for investing more than A$2.7 trillion (US$2.1 trillion) on behalf of 13 million Australians.


 

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