Life Insurance Code of Practice subscribers may not be fully reporting significant breaches after the 2021/22 year registered 33% fewer non-compliance cases, the code compliance committee says.

The Life Code Compliance Committee in its annual report says subscribers recorded 22 significant breaches, down from 33 in the preceding year.

It says significant breaches have fallen by at least 25% each year since 2019/20 and while the decline may to some extent be explained by improved compliance frameworks, the committee is concerned about under-reporting by subscribers.

Another possible explanation behind the decline is that “some subscribers continue to under-report significant breaches because they do not have sufficiently comprehensive processes and procedures in place to identify and report all significant breaches”, the report says.

The committee says its recent own motion inquiries have identified several significant breaches that subscribers themselves had failed to detect as part of their regular compliance monitoring activities.

“We also continue to see a discrepancy between the number of reported significant breaches and the number of breach allegations referred to the Committee by other sources,” the report says.

“Subscribers promise consumers that they have robust Code compliance frameworks. We expect subscribers to be able to identify, capture and manage all breaches, and to assess and report significant breaches within the timeframe provided by the Code.”

Life Code Compliance Committee Chairman Jan McClelland says the industry needs to improve its monitoring and reporting process as it prepares to transition to the new Code, which comes into effect in July next year.

The new Code introduces more consumer protections and enables the Committee to determine significant breaches and sanctions non-compliant subscribers.

“We strongly encourage all subscribers to review their compliance monitoring frameworks to ensure they are capturing all significant breaches and have clear and strong processes for transitioning to the new Code,” Ms McClelland said.

“While some insurers are working very well with us and actively looking to enhance performance, others need to improve their monitoring and reporting processes and systems.

“This will be particularly important as more than 50 changes to further protect customers are implemented when the new Life Insurance Code of Practice comes into effect in July 2023.”

Here are other key findings from the 2021/22 report:

• Half of the 22 reported significant breaches were identified through the Committee’s own motion inquiries
• The Committee confirmed 35 significant breaches
• About 41% of significant breaches reported during the year related to claims, of which 44% were linked to claim decision timeframes and 56% to providing clarity of benefit entitlements, contact points and when the customer can expect to be contacted about progress on the claim
• Around 51% of significant breaches confirmed by the Committee related to claims
• About 41% of significant breaches reported related to policy changes and cancellation

Click here for the report.