The independent panel that reviewed the industry code of practice has criticised the Insurance Council of Australia’s response to its recommendations, particularly on pricing and enforceability, and where it has deferred matters to individual members.

“There seems to be a lot of recommendations where they’ve hit the pause button, and I guess we’re just trying to say that’s really not good enough from our perspective,” panel chair Helen Rowell told insuranceNEWS.com.au today. “There’s an expectation that the industry is going to respond, and that’s what we want to see them do.”

The panel says the industry should make the code part of customer contracts, so provisions are backed by that enforceability, as in the banking sector.

It also encourages ICA to act on premium and pricing recommendations by seeking Australian Competition and Consumer Commission authorisation for conduct that creates a public benefit.

“Consumers should not pay more for monthly premiums versus annual premiums, and premiums for renewals should not be more expensive than premiums for new customers,” the panel said.

An ICA action plan released on Monday responds to the remainder of the code review panel’s 101 recommendations after an initial response in December.

The plan also provides responses to parliamentary floods inquiry proposals.

Of the 150 recommendations for insurers, ICA says 109 are agreed or agreed in principle, 28 require further investigation by industry, 10 require individual insurers to determine their practicality or appropriateness, and three related to pricing are not supported.

ICA’s response noted the customer contract recommendation and says it understands the reasons and will work with the corporate regulator on the issue of enforceability.

But it says the code’s purpose is not to prescribe pricing approaches and insurers cannot implement the recommendations on monthly premiums and renewals due to competition law constraints.

The independent review panel encourages ICA to consider all recommendations and to “expeditiously” submit a revised code for Australian Securities and Investments Commission approval.

“In the meantime, the panel hopes that ICA and insurers continue to take steps to improve industry practices in the areas the subject of the various recommendations ahead of the formal implementation of the revised code,” it said. “It is also important from an accountability perspective that ICA and industry are transparent, on an ongoing basis, about their response and the changes in practice that have been and continue to be made.”

Ms Rowell says the panel expects the ACCC will be open to proposals obviously to the benefit of consumers, ASIC has already completed banking code processes on contractual enforceability, and ICA needs to move ahead without delay on recommendations. 

“They are a diverse group, as I understand it. There are some who are largely on board and others who are less so, but I think ICA has a role to play in really pushing hard and galvanising the industry to move forward on some of these things,” Ms Rowell said.