The Senate has voted to include the life insurance industry in terms of reference for its review of financial advice.

The Economics References Committee will examine the “need for further reform and improved oversight of the life insurance industry”.

It will also consider whether insurers “are engaging in unethical practices to avoid meeting claims and whether a life insurance industry code of conduct is required”.

The latter question seems to ignore or not be aware of the Financial Services Council’s code that will be implemented in July.

The committee will also examine the role of the Australian Securities and Investments Commission in life industry reform and oversight.

Submissions to the committee close on April 15.

Curiously, this extension of the committee’s scope was raised by NSW senator John Williams two days before Fairfax Media and the ABC produced stories on CommInsure’s claims procedures.

Commonwealth CEO Ian Narev has admitted the bank did not handle the cases in question well, saying that “in these cases we focused too much on process rather than people”.

“By their nature, life insurance policies can be complex. Claims processes involve the review and assessment of detailed documentation. 

“While thoroughness is important for the integrity of the system, this must be balanced by customer need and dignity. Here, we got that balance wrong.”

Mr Narev says CommInsure last year paid more than $850 million of life and income protection payments to 22,000 people and their families.

“It is a substantial business, and that scale supports customers for the long term, which is essential in life insurance. However, in complex or difficult cases, claims assessment can sometimes be bureaucratic and not escalated quickly enough.”

The media reports criticised CommInsure’s medical definitions, and the bank says these are being updated, with completion due in October.

Australian Prudential Regulation Authority figures for last calendar year show the life industry paid $7.66 billion in death and disability claims, up from $7 billion in 2014.