The Insurance in Superannuation Working Group (ISWG) has indicated that the code of practice which it is preparing to cover insurance in superannuation would be ready by yearend.
The ISWG code would follow on the heels of the Life Insurance Code of Practice, the first-ever issued for the life sector that came into force on 1 July. The latter was issued by the Financial Services Council (FSC).
The ISWG, formed in November 2016 to collaboratively enhance future iterations of policy development, has members that include the FSC, Australian Institute of Superannuation Trustees (AIST), the Association of Superannuation Funds of Australia (ASFA), Industry Funds Forum (IFF) and Industry Super Australia (ISA).
The FSC said that the ISWG code should require life insurance companies to explain the cover, claims process and why information will be requested of the customer to support the claim with 10 business days of being notified that a customer wishes to make a claim, reported The Australian Financial Review.
"The FSC Life Insurance Code of Practice also imposes standards of conduct on life insurance companies to avoid multiple requests for information and use of general authorities to obtain information about a claimant from other sources," the council said.
The FSC, though, has declined to seek approval from the Australian Securities & investments Commission (ASIC) for its code, a move which had been requested by Financial Services Minister Kelly O’Dwyer.
The Treasury has released a consultation paper as part of its ASIC enforcement review, which proposes several new powers for the corporate regulator to enforce industry codes in the financial sector. One proposal is that industry codes must be approved by ASIC; another is that companies operating in an industry with a code must subscribe to it.
However, FSC chief executive Sally Loane said that the FSC Life Insurance Code of Practice is proof of the industry’s pledge to improve standards and strengthen consumer protection. “The absence of ASIC approval of a code does not in any way suggest or imply that a code is not robust, has significant consumer value or lacks strong governance,” she said.