The industry’s handling of income protection and total and permanent disability claims will be scrutinised during a Life Code Compliance Committee inquiry.

The committee will also launch inquiries into life insurer compliance with the code of practice’s protections on mental health and Aboriginal and Torres Strait Islander consumers.

It has flagged the plans in its 2023-24 annual report, which details key activities of last financial year, including supporting the industry’s transition to the updated code from July 1 last year.

“We worked hard to ensure the transition to the new code would be smooth, allowing for continued compliance from the industry and uninterrupted protections for customers,” committee chair Jan McClelland said. “The new code introduced new customer protections and provided us with stronger powers to impose sanctions for serious non-compliance.

“These enhancements represent significant steps forward for customer care and accountability within the life insurance industry.”

The committee’s inquiry into claims handling time frames will evaluate the systems and processes life insurers have in place or are introducing to meet its code obligations.

“Concurrently, we will examine the overturn rate of claims following a customer complaint,” the report says. “In recent years, we observed an increase in complaints related to time frames for assessing claims and a rise in breaches concerning claim decision time frames.

“We want to understand the reasons behind these increases, the efforts the industry is making to improve practices, and whether further guidance or intervention is required.”

At the end of the inquiry, the committee will share good practices and make recommendations for improvements.

“If we identify serious and systemic concerns, we may consider further action, including sanctions, to address these issues.”

The mental health inquiry aims to understand how life insurers treat people with psychological  conditions during the underwriting process.

“The code includes several important protections for consumers with mental health conditions that relate to applying for a life insurance policy or altering an existing policy,” the report says. “It is critical that people experiencing mental health issues receive the protections in the code.

“The inquiry will determine how well insurers are honouring their commitments to code obligations.”

On the third inquiry, the committee says it is aware of instances of Aboriginal and Torres Strait Islander consumers being sold inappropriate insurance products or experiencing difficulties accessing benefits due to complex requirements and processes.

“The code contains specific obligations designed to improve experiences and outcomes for Aboriginal and Torres Strait Islander peoples. This inquiry will assess how well insurers are meeting those obligations, identify areas of non-compliance and recommend improvements.”

Click here for the annual report.