The independent Life Code Compliance Committee (LCCC) has described a rise in reported significant breaches as “encouraging”, saying it shows life insurers are taking their reporting obligations seriously. 

Subscribers to the Life Insurance Code of Practice reported 38 significant breaches during the last financial year to the compliance committee. In the prior 2021/22 period they reported 22, down from 33 a year earlier. 

The compliance committee subsequently flagged concerns about the decline in the 2021/22 reporting period to the industry and urged subscribers to review their reporting processes. 

Subscribers may determine a breach is significant based on a number of references. These include the impact of the breach on the subscriber’s ability to provide their services, the extent to which the breach indicates that the subscriber’s arrangements to ensure compliance with code obligations are inadequate or the actual or potential financial loss caused by the breach. 

“The past 12 months saw an encouraging increase in subscribers identifying and reporting significant breaches, suggesting that our message from previous years urging transparency and accountability through ongoing monitoring and accurate and up-to-date reporting, has resonated in the industry,” Chair Jan McClelland said in the LCCC 2022/23 annual report. 

“While our goal is to see fewer breaches, this must result from genuine commitment to compliance and real improvements in practices.” 

The annual report says the compliance committee reviewed 236 possible breaches of the code and confirmed 79 breaches, including 35 significant breaches. 

Of the 79 breaches, 78 resulted in some form of corrective action by the subscriber. Corrective action ranged from implementing an improved process, conducting remedial training for staff members, to financial compensation for the customer.  

The report says claims-related breaches made up the majority of alleged breaches, a finding consistent with data from previous reporting periods. 

“With claims-related issues remaining key, subscribers must continue to invest in and improve their processes and procedures to assess claims more efficiently and effectively,” the annual report says. 

“The identification, reporting and remediation of breaches and complaints provides subscribers with unique opportunities to improve processes and systems and is the bedrock of the self-regulatory code.” 

A key piece of work during the year relates to the launch of the new code on July 1. The new code comes with more than 50 new consumer protection measures including a financial penalty of up to $100,000 for significant breaches and an extension of the moratorium on genetic testing. 

“I am confident that we have done all we can to provide support and guidance on the new code. This allowed life insurers to focus on improving their practices and meeting the new obligations without any uncertainty,” Ms McClelland said. 

The compliance committee also touched on the transfer of the ownership of the code to the Council of Australian Life Insurers (CALI). CALI assumed custodianship last week from the Financial Services Council, which developed and launched the code in 2016. 

“The [compliance committee] looks forward to working with CALI, as the new owner of the code, in progressing innovation and continuous improvement in the life insurance industry and achieving positive outcomes for customers and industry,” Ms McClelland said. 

Click here to access the report.