General Insurance Code of Practice breaches have more than doubled in a “dramatic spike”, while the number of significant breaches has increased fourfold, the Code Governance Committee’s annual report shows.

Breaches reported jumped to 31,186 last financial year, compared with 13,668 in the previous 12 months. The two code standards most consistently contravened related to the handling of claims and complaints.

The governance committee report doesn’t identify insurers by name but says some 84% of breaches were attributed to five subscribers. One entity that was responsible for 51% of breaches, said it had enhanced its incident reporting system and improved governance.

Significant breaches jumped to 119 from 29 a year earlier, and the upward trend has continued into the current financial year.

“Such a substantial increase in breaches is concerning as it means that consumers and small businesses are not receiving the protection afforded to them by the code and that subscribers’ breach prevention processes are inadequate,” Independent Chair Lynell Briggs says.

The Governance Committee says it’s unclear if the surge in numbers is because more breaches took place, or because of better monitoring and reporting, or both.

Ms Briggs says the Hayne royal commission and the committee’s increased focus on code compliance and governance appear to have encouraged subscribers to look more closely at their compliance obligations.

The industry is transitioning to the updated 2020 code of practice, with subscribers required to be compliant by January. They must also introduce a publicly available policy to support customers affected by family violence by July this year.

“Our expectation is that breach numbers will remain at historically high levels for some time, as the insurance industry progressively introduces and beds down better compliance and monitoring arrangements and adjusts to the requirements of the new code,” Ms Briggs says.

The report highlights the importance of insurers acting in the spirt of the new code in handling summer bushfire claims, and emphasises obligations to act openly, fairly and honestly in dealing with policyholders amid the COVID-19 pandemic.

“Consumers and small business need the protections provided by the code especially during this time of extreme crisis when they are most likely to be affected by family violence and financial hardship,” Ms Briggs says

In the past financial year almost 43% of significant breaches involved standards around product purchasing, particularly failing to conduct sales processes efficiently, honestly, fairly and transparently.

Significant breaches included incorrectly calculated premiums and incorrect advice on websites, while for claims handling key issues included delays in keeping consumers informed over progress and decisions.

The annual report includes 17 recommendations to enhance code monitoring and reporting processes and to improve compliance.

The Insurance Council of Australia says it has received the report and is reviewing it for its implications.