Home / Life Insurance / Life industry slammed over ‘tick a box’ code compliance
29 June 2020
Life insurers have come under fire for not taking their industry code of practice seriously, with the compliance committee reminding the industry that “self-regulation is a privilege, not a right”.
Introduced in July 2017, the code aims to improve service standards, but the committee’s annual compliance report for the 12 months to June 30 last year suggests much work remains to be done.
While the number of self-reported breaches dropped 38% to 101, isolated breaches went up 45% to 11,483. An isolated breach is a single breach resulting from a specific cause at a point in time and affecting one customer.
“We remind subscribers that self-regulation is a privilege, not a right,” committee Chairman Anne Brown said. “That privilege comes with a responsibility to ensure that appropriate mechanisms are in place to monitor compliance and report code breaches via accurate quantitative data.
“From the data submitted and the breach investigations conducted during the year, the committee has been left with the impression that a number of subscribers were not taking their code compliance obligations and the code’s true purpose seriously.
“Demonstrating compliance with the code is not simply a case of ticking boxes or doing ‘just enough’. It is about fully embracing the spirit of the code by providing a high level of customer services.
“It also involves rigorous self-appraisal and a willingness to identify, remediate and learn from any code breaches.”
The Financial Services Council (FSC), which developed and maintains the code, says the feedback from the committee will help the industry to improve.
“The 2018/19 report reflects results from the code’s second year in existence and we are confident the industry is undertaking determined steps to improve the way it delivers services to customers,” CEO Sally Loane said.
“As the third year of the code approaches on June 30 2020, the next iteration of the Life Code is already under construction, and will further raise the bar for Australian life insurers and assist consumers.”
There were 26 subscribers to the code in 2018/19 including four specialist reinsurers that only insure the risk taken on by other life insurers and do not issue policies directly to consumers.
Subscribers attributed 45% of breach events and 88% of isolated breaches to people-related issues, including inadequate staff training, human error and a failure to follow the correct processes and procedures.