The Financial Services Council (FSC) has jumped to the defence of its life insurance members in the face of a report from the Life Code Compliance Committee (LCCC) which plaintiff law firm, Maurice Blackburn, claimed showed that the insurers breached their own code of ethics hundreds of times in six months.
The report, released by the LCCC this week, was actually the result of a review initiated by the committee after receiving more than 700 alleged breaches of the code “from a plaintiff law firm”,
In the end, the LCCC found that 315 out of 701 alleged breaches amounted to breaches of the code with the committee stating that it was most concerned that a substantial number were only identified as a result of the bulk referral “indicating that many subscribers lacked robust frameworks for monitoring compliance”.
“While subscribers have now made, or are working towards making, the necessary remedial changes to strengthen their compliance monitoring frameworks, the Committee notes that it has taken far too long and is largely only occurring as a result of the review rather than the subscribers’ desire to ensure they comply with the Code,” the LCCC report said.
For its part the FSC claimed the LCCC’s report was the final outcome of a review relating to cases dating back to the early days of the Life Insurance Code of Practice and suggested the referrals were “old, resolved cases” and pointed out the report was “silent on the positive changes made by the life insurance sector”.
“It is important to note that the allegations in this report relate only to the timing of decisions, not the outcome of decisions. What the data shows is:
Most allegations (598) were regarding the timing of claims decisions;
After investigating the 598 allegations, more than half were found not to be breaches, and almost one in eight (13%) of these allegations were “unfounded”.
The remaining allegations (103) were about the timing of complaint outcomes, of which two thirds were found not to be breaches, and over 7.5% were “unfounded”.
The FSC said the report was also silent on the LCCC’s own findings from their latest compliance report which showed that in the year to 30 June 2018 life insurers assessed 131,271 claims and that of these 89% of income-related claims and 92% of non-income relate clams were within the required Code timeframes.