The Insurance Council of Australia says it supports 78 recommendations from the federal floods inquiry and the independent review of its code of practice, offering an initial response as it continues to work through more challenging proposals.

The independent panel reviewing the code of practice released its final report today, leaving 101 recommendations from its first report in September unchanged after considering the parliamentary inquiry findings on the industry’s handling of the 2022 floods.

ICA says the scale and complexity of the inquiry recommendations and their interaction with the code requires it to respond to both reviews “collectively and in a phased manner”.

“This approach means the industry can respond and take action now on an initial tranche of recommendations and provides time to work collaboratively to consider more complex recommendations,” it says.

The floods inquiry made 86 recommendations, including those aimed at the code of practice and the industry, while others involved regulators and the government.

ICA says on 37 flood inquiry recommendations, plus 41 from the code review, it has responded to those that can be supported or where the industry can work constructively with others to explore implementation. It is acting on recommendations seeking to improve products and processes for customers, “while ensuring healthy product competition and innovation”.

“The Insurance Council is actively reviewing the remainder of the recommendations with a focus on ensuring that the changes are proportionate to the problem being addressed, do not constrain competition, allow flexibility and promote innovation,” it says. “These elements are critical in continuing to place downward pressure on premiums.”

ICA says the industry has already made progress on many recommendations from the twin reviews, including work on standardised maintenance and wear and tear clauses, and better identification and handling of vulnerable customers.

Further progress will be outlined in an update to the industry-commissioned Deloitte report into the floods. Finalisation of this has been extended until early next year due to the focus on responding to the code review and parliamentary inquiry.

ICA will begin redrafting the code of practice in the first half of next year and, after a consultation, the document will be sent to the Australian Securities and Investments Commission for approval.

“The insurance industry is committed to enhancing and uplifting outcomes for customers – not just during a disaster but systemically,” ICA CEO Andrew Hall said.

Consumer groups say the industry has made a good start in its response, but there is a long way to go. 

“Insurers have picked off some low-hanging fruit in the recommendations and we commend them for beginning their journey to implement some changes,” Financial Rights Legal Centre acting CEO Alexandra Kelly said.

“However, there remain 60 code recommendations and 49 flood report recommendations outstanding, or close to 60% of the total recommendations needing to be considered and worked on, and most of these are the real meat of the recommendations that need addressing.”

Recommendations omitted from the initial ICA response include extensions to temporary accommodation benefits, incorporating the code into customer contracts so commitments are contractually enforceable, and a code review proposal to double the maximum community benefit payment for breaches to $200,000.

The independent code review panel says the scope of its work and the floods inquiry differed, but in areas of overlap there was “considerable alignment and consistency”.

“The review panel encourages ICA and insurers across the country to act in a timely way on the important steps needed to improve industry practices across the various issues and areas covered in the report,” panel chair Helen Rowell said. “We look forward to seeing the recommendations come to life, and the improvement in the experience and outcomes for consumers as a result.” 

The review panel also included consumer expert Gerard Brody and insurance industry representative Paul Muir.

The federal government is yet to respond to the floods inquiry findings, which were delivered in October by the House of Representatives Standing Committee on Economics.

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