The Financial Services Council (FSC) and Council of Australian Life Insurers (CALI) have welcomed the new Life Insurance Code of Practice, which comes into effect 1 July 2023, that will deliver higher standards and stronger consumer protections in life insurance services.
According to the FSC, the new Life Code will introduce over 50 new important consumer protections covering all aspects of how customers interact with their life insurer.
It encompasses product design, sales practices, and claim processes, and includes vital safeguards for customers during periods of vulnerability, financial hardship, or when experiencing mental health conditions.
It will also include stronger powers for the Life Code Compliance Committee (LCCC) to impose sanctions and financial penalties on organisations subscribed to the code.
The new Life Code is among a slew of important changes to financial services products, superannuation funds, and life insurance policies that take effect in the new financial year.
“The changes will better empower Australians in managing their superannuation, provide enhanced consumer protections in the life insurance sector and change the way the financial services industry approaches the design and distribution of products to consumers,” said FSC chief executive, Blake Briggs.
CALI chief executive, Christine Cupitt, said the new code “sets a higher bar for the industry” and ensures trust and accessibility in these services. Each of CALI’s 19 members are subscribed to the new code, she said.
Cupitt continued: “[It] will deliver better outcomes for Australians, tougher penalties for conduct breaches and strong independent enforcement.
“With this newly updated Life Code, our members can continue to deliver the protection and certainty Australians need on their best and worst days.
“CALI is committed to ensuring Australians have peace of mind about their financial and overall wellbeing as they face life’s biggest challenges. We want to expand their access to the life insurance protection that suits them when they need it most, in an accountable and transparent way.”
The transition of governance of the new Life Code is expected at the end of September 2023, moving from the FSC to CALI. CALI was formed in late 2022 after 19 members departed the FSC to form the new association dedicated to life insurance.
In addition to the code, the FSC notes an enforceable standard for handling group life insurance claims in superannuation will commence operation on 1 July. It will be mandatory for all FSC superannuation members to complement the protections in the new Life Code.
The standard includes consumer-focused commitments for trustees to help fund members make claims on their insurance, review the life insurer’s decision, ensure prompt payments of accepted claims, and oversee the timeframes for claims assessments.
