Adviser associations have remained silent on the Financial Services Council’s (FSC) Life Insurance Code of Practice.

The code has garnered support from some life insurers and the Federal Government, but a consumer group has called it a work in progress.

“This is a positive step in improving consumer outcomes,” Financial Services Minister Kelly O’Dwyer said. “The Government encourages the FSC and life insurance industry to continue to work on improving consumer outcomes in this vital sector of the financial system.”

She says the Government expects the FSC and life insurers to work on expanding the code’s coverage into group life and have the document approved by the Australian Securities and Investments Commission.

Consumer Action Law Centre CEO Gerard Brody says a code of practice should deliver high standards.

“This first code is an acceptable start, but there are significant gaps and more needs to be done,” he says.

“The code is also insufficient with respect to very problematic products and sales practices, such as funeral insurance and ‘add-on’ sales practices.

“Australians expect insurance to be valuable, whereas too often these are about gouging the most vulnerable.”

Despite group life being outside the code, the Association of Superannuation Funds of Australia has welcomed it.

“It will help enhance consumer rights and lift standards and consistency in the application of processes, such as claims and product management, across the life industry,” Interim CEO Jim Minto said.

“The super industry would now embrace the opportunity to work together to lift consumer protections and standards, building from the strong base of the FSC life code.”

AIA Australia, MLC and TAL have all backed the code, saying they will work with the FSC to expand its coverage.

AIA CEO Damien Mu says the code “places significant obligations on insurers that go beyond existing legal requirements. Consumers will receive important benefits and protections as part of this.

“This includes the use of plain English in product disclosure, clear expectations on sales practices, minimum standard definitions and additional support to vulnerable people.”

Mr Mu says work extending the code to group life cover must start immediately.

“We look forward to working collaboratively with the super industry and trustees to further improve the insurance experience for members,” he said.

“An insurance taskforce will be established to help progress this work.”

MLC Life CEO David Hackett says the code is “customer-focused” and signing is “the right thing to do”.

“It will also ensure there are consistent standards that will be binding on FSC industry members,” he said.

“We intend to be constructively engaged with the industry and regulators in the further development of minimum standard medical definitions for the Australian life industry.”

TAL CEO Brett Clark says the code is the “start of the journey for the industry, not the end”.

“As an industry we should expect and demand to be held to the highest standards,” he said.

“It is our challenge now to continue pursuing progress on this code, to ensure we ultimately deliver greater trust and confidence in the life insurance industry among all Australians.”

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