Financial Services Council (FSC) members are now subject to the industry’s first Life Insurance Code of Practice for consumers, which came into effect from 1 July.
The code covers all aspects of interactions with consumers from product design, buying insurance, regular communications and making claims. It also 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 would result in sanctions including:
- Requiring rectification steps within specified timeframes;
- A formal warning;
- Requiring a code compliance audit be taken;
- Requiring corrective advertising or written acknowledgement of a breach to impacted customers; and
- Publication of non-compliance on the insurance provider’s website and the FSC website.
The FSC said the code had been strengthened ahead of its launch with a foundation of new minimum standard definitions for cancer, heart attack, and stroke for use in trauma/critical illness policies.
The new definitions had been developed with the assistance of medical professionals and their development would be an important foundation in ensuring consumers have confidence in the code.
FSC chief executive, Sally Loane, said: “The FSC has worked closely with our life insurance members and medical professionals to ensure that a new foundation of minimum standard medical definitions is implemented for new policies from day one of the code regime. In doing so we have laid the foundations for the on-going strengthening of the code”.
“As part of the second iteration of the Life Insurance Code of Practice we are committed to considering ASIC [Australian Securities and Investments Commission] registration,” she said.
The FSC also said that its Life Code Compliance Committee (LCCC), the independent body responsible for ensuring member compliance with the code, had been appointed.
The committee will be administered by the Financial Ombudsman Services, and has an industry representative, a consumer representation, and an independent chair.
The members are Professor David Weisbrot (chair), David Goodsall, and Alexandra Kelly.