The updated Life Insurance Code of Practice will include additional changes in the form of increased support for vulnerable customers and more protections for claimants, the Financial Services Council (FSC) says.

The independent compliance committee will also be given new powers to enforce the code and impose sanctions on subscribers who commit significant breaches.

FSC says the additional changes come on top of other amendments that were previously introduced in the consultation draft of the code, which was introduced in 2017 to improve service standards across the industry. It is the first review of the code since its introduction.

“Life insurers recognise the importance of the code and of reviewing the code as part of a process of continual improvement,” FSC CEO Sally Loane said. “There are many lessons learned since the code was introduced which are incorporated in this response document.

“The Government will soon introduce legislation which would see certain provisions of the code made enforceable, breaches of which would be subject to civil penalties.”

FSC says the industry has seen new challenges since the release of the consultation draft in November 2018. These include recommendations from the Hayne royal commission, worsening mental health claims, concerns over the sustainability of disability income products and the business fallout from COVID-19.

“As well, further legislative reforms, such as the design and distribution obligations and enforceable codes have changed the operating environment for life insurers and the code,” Ms Loane said. “Existing code obligations will now be enforceable under law, and new obligations have been introduced which supersede the current code.

“We are ready to do even more for Australians under Code 2.0. I welcome the revisions that will be made as a result of the industry’s consultation.”

The next iteration of the code proposes to recognise additional categories of people who require additional support. These include clients who are experiencing family violence or have mental health conditions.

The draft code has added an obligation to take a flexible approach to identification, recognising that some groups such as non-English speaking backgrounds or indigenous communities, may require additional flexibility.

Click here for more on the consultation feedback report.