The Financial Services Council (FSC) says some points raised in submissions may be incorporated into future revisions of the Life Insurance Code of Practice.  

CEO Sally Loane says the code was developed after an extensive consultation with advisers, superannuation trustees and industry groups.

“Some of the public feedback has informed the current version of the code. Any that has not been incorporated will be considered during the first review of the code, with a view to consistently improving and expanding its standards.”

The code covers all registered life insurance companies issuing policies, so direct products are included in the document.

Any other organisation selling life insurance can be included after signing an agreement with the FSC and the Life Code Compliance Committee.

Financial advisers and super fund trustees are not bound by the code. This includes advice delivered through a dealer group owned by an insurer.

But the code is unclear on advice delivered by an insurer-owned adviser, as explained in the following two points.

“We, us and our mean the entity that is bound by the code,” the document says. “Where we are referred to in the code, this refers to the entities described in Section 2.1 [describing life insurance companies] acting individually and independently, and not collectively.”

The next point in the code seems to suggest insurer-owned advisers are covered.

“We will ensure our staff and any person or entity authorised by us to provide financial services on our behalf under our Australian financial services licence comply with the code when they are acting on our behalf,” the document says.

Ms Loane says the FSC wants to work with advisers and super fund trustees to expand the code’s coverage, although both the Association of Financial Advisers and the Financial Planning Association have their own codes.

Most life insurance products are covered by the code, but annuities and whole-of-life policies are excluded.

The code forces life insurers to review their medical definitions “in consultation with relevant medical specialists” every three years, although group life cover is excluded.

Ms Loane says the FSC will work with insurers on standard medical definitions, and will discuss the possibility of establishing a standardised process for policy upgrades.

The next version of the code may include increased obligations regarding mental health issues.

“The FSC will work with groups such as Beyondblue, Lifeline, Mental Health Australia and the Public Interest Advocacy Centre to determine how to better serve those consumers with mental health issues,” Ms Loane says.