Australia’s Financial Service Council (FSC) has proposed a “radical overhaul” of the code governing the conduct and practices of the country’s life insurers, introducing some 30 changes.
The FSC Life Insurance Code of Practice builds on the original code, introduced in 2017, with the changes designed to lift standards in product design, sales, underwriting, customer service, complaints and claims handling.
The updates will come into force from July 2019.
Among the numerous changes, the revised code will:
- ban pressure selling and coercive retention tactics;
- ban medical disclosure checking (without reasonable grounds);
- improve funeral insurance;
- separate consumer credit insurance from credit product sales; and,
- extend the jurisdiction of the code to all life insurance distributors.
Serious reform
“Every aspect of the life insurance industry is under the microscope following the poor behaviour brought to light during the Royal Commission,” said Sally Loane, chief executive of the FSC.
“We owe it to consumers to do a better job. With the release of the consultation draft of the second iteration of the code, the life insurance industry is demonstrating it is serious about improving products, practices and governance to rebuild the standing of the sector.”
Nick Kirwan, senior policy manager at the FSC, added: “From 1 July 2019, the life insurance industry plans to introduce a moratorium so that every Australian can get up to A$500,000 (£280,000, $360,000, €320,000) of life cover without having to disclose an adverse genetic test result.
“The moratorium will mean that people can take part in genetic research, or take a test individually, without fear that the result will stop them taking out life insurance.”
The FSC will also hold three public meetings – in Melbourne. Sydney and Brisbane – where people interested in the proposals can ask questions, provide feedback and make a written submission on the draft code, which is open for consultation until 12 January 2019.
The code will undergo an independent review every three years starting from 2022.
