The Council of Australian Life Insurers (CALI) has taken over governance of the Life Insurance Code of Practice from the Financial Services Council (FSC). 

The life peak body and the FSC had been in talks to transit stewardship of the Code by September 30 after the creation of CALI last year. Life insurers established CALI, saying the industry needed a dedicated body to represent them. 

CALI is now responsible for the Code and the primary point of contact for industry stakeholders, regulators and policymakers. All 19 CALI members are subscribers of the Code. 

“This is an important milestone for CALI and a critical part of our role representing life insurers and supporting Australians to make informed choices about their future,” CALI CEO Christine Cupitt said. 

She says Australians will continue to benefit from “high standards and strong consumer protections” following the transition to the life peak body. 

However, consumer advocate Financial Rights Legal Centre (FRLC) has voiced concerns, saying CALI has amended the Code in ways that will result in less protections for life policyholders. 

FRLC Senior Policy and Advocacy Officer Drew MacRae says some of the amendments are “straightforward and superficial” but points out there are a number of changes that “are genuine steps backwards” from commitments made previously by life insurers under the FSC. 

He says one such change relates to clause 3.15 requiring insurers to inform customers about errors, omissions or inconsistencies that impact them within 10 business days. 

Previously the clause said the timeframe “will not apply if the error is part of a broader remediation program affecting multiple customers”. 

The change made by CALI has the clause now worded as the timeframe will not apply if the mistake is “identified as part of an investigation into a potential or actual broader remediation program affecting multiple customers or has been reported to a regulator”. 

Mr MacRae says the amendment is a “significant broadening” of the circumstances whereby a life insurer does not have to inform an insured of an error on the life insurer’s part within the 10-day timeframe. 

“These moves are really not a positive start to CALI’s ownership of the code and sends exactly the wrong signal to consumers of life insurance,” Mr MacRae told insuranceNEWS.com.au. 

“Nor are these moves a great way to kick off a relationship with consumer representatives and other stakeholders who have a keen interest in ensuring life insurance consumers are served well by the sector and the Code.” 

Mr MacRae says he has flagged the FRLC’s concerns with CALI. “We appreciate CALI acknowledging the issues we have raised and look forward to life insurers taking swift steps to resolve them as soon as possible.” 

Asked about the FLRC’s concerns, Ms Cupitt told insuranceNEWS.com.au the peak body “is committed to engaging with all advocates and representatives to ensure that the life insurance industry and the Code continue to respond to consumer and community expectations”. 

The FSC introduced the Code in 2016 and in July this year launched the latest iteration of the document, adding more than 50 new consumer protection measures such as a financial penalty of up to $100,000 for significant breaches and an extension of the moratorium on genetic testing. 

FSC CEO Blake Briggs says his organisation will continue to be involved in related policy debates, including financial advice and the “increased” political and regulatory scrutiny surrounding group life insurance in superannuation. 

“Our ongoing involvement in insurance-related policy reflects our commitment to safeguarding the interests of consumers and ensuring that the financial services industry remains responsive to consumers’ needs,” Mr Briggs said.