A key parliamentary committee has rebuffed both the Financial Services Council (FSC) and a number of major life insurers by rejecting the proposition that life insurers should be allowed to participate in rehabilitation processes aimed at getting workers back to work sooner.
The measure was opposed by a number of unions and some industry superannuation funds with the Parliamentary Joint Committee on Corporations and Financial Services ultimately deciding to reject the FSC proposal but recommending further examination by the Australian Securities and Investments Commission.
The committee report found that notwithstanding the benefits being claimed by the FSC and the insurers, it noted that a number of other parties had suggested the benefits would be outweighed by other harms and referenced the submissions of plaintiff law firm, Maurice Blackburn together with that of the Financial Rights Legal Centre.
However, the major reason for rejection appeared to be the committee’s concerns about the culture and conduct of the life insurance industry and what it perceived to be potential conflicts of interest and a power imbalance between insurers and those being insured.
Commenting on the committee’s final report, FSC chief executive, Sally Loane said her organisation was deeply disappointed and claimed that the industry’s proposal would have allowed insurers to fund a range of treatments to help sick and injured people return to wellness sooner.
In rejecting the life insurers’ early intervention proposal, Ms Loane said the PJC has instead focused on cultural issues within the life insurance industry rather than considering consumers who need help today.
“We accept that there are a range of issues which the life insurance industry must address – and we are working to confront these problems – but the FSC believes that the PJC has not given due consideration to early intervention on its own merit,” she said.
“The industry is facing into community concerns, listening and acting on recommendations from the PJC’s previous inquiry into the life insurance industry. We are well underway with the second iteration of the Life Code of Practice, which addresses many of the issues raised by the PJC. People who need help want to get back on their feet now. For them reform to allow early intervention by life insurers to provide treatment cannot wait.”