The Financial Services Council (FSC) and the life insurance industry have published the new Life Insurance Code of Practice (the Life Code). The new Code takes effect on 1 July 2023, and provides the industry with 12 months to make the transition.
The Code was unveiled at the same time that Australian life insurers announced they have commenced work to form an association to serve the sector that until now has been represented by the FSC.
Commenting on the Code, FSC CEO, Mr Blake Briggs, said in a statement, “The new Life Code introduces more than 50 additional consumer protections that will ensure Australians get fair treatment and higher standards of service from their life insurer.
“The Life Code is the industry’s commitment to customers for consistent service standards that cover every aspect of a customer’s journey, from taking out a policy to making a claim, and compliance is monitored by the independent Life Code Compliance Committee.
Practice Code benefits several parties
Mr Briggs said, “The Life Code introduces a range of improved consumer protections, especially when Australians need to claim on their life insurance policy, such as ensuring claimants are supported if they need to be interviewed and further restrictions on the use of surveillance.
“There will also be greater support for vulnerable consumers, such as by defining gratuitous concurrence and ensuring consent is genuine for First Nations people, as well banning blanket mental health exclusions in the standard terms and conditions on all newly designed contracts.
“The new Life Code includes an enhanced role for the Life Code Compliance Committee by providing the Committee with increased powers to impose sanctions for breaches, including potentially requiring a community benefit payment to a charity.”
Compliance with the Life Code is mandatory for all of the FSC’s life insurance members. The life insurance industry undertakes to engage with ASIC on its intent to have the Life Code registered with ASIC under its Enforceable Code Regime in the future.
At the same time, life insurance companies have announced the formation of a dedicated industry peak body, the Council of Australian Life Insurers (CALI).
“Given the changing landscape in both regulation and structure, as an industry, we believe the time is right to form a dedicated peak body to focus solely on matters affecting the life insurance industry and its customers,” said a CALI spokesperson.
A media release said, "CALI will also look to foster and strengthen the knowledge and understanding of Australians on the value of life insurance and the importance of the benefits and protections it provides."
CALI's initial focus will be on lifting consumer standards within the industry through professional standards and codes of conduct; advocating for appropriate, affordable, and sustainable cover; educating broadly on the value of insurance; and identifying opportunities for the industry to further contribute to the community.
The statement says that the FSC has played a critical role in representing the life insurance industry and was instrumental in key initiatives.
The new industry body will seek to take over future responsibility of the new Life Code as part of transition arrangements with the FSC.
The FSC says it looks forward to working with the group. Mr Briggs said, "The FSC's priority is continuing to be a strong advocate for our broader membership across funds management, superannuation, financial advice, life insurance and investment platforms, and we welcome the opportunity to collaborate with aligned organisations that represent sub-sectors within the industry."
CALI is currently hiring staff, including looking for a chief executive.