Public submissions for the Insurance Council of Australia’s (ICA) new draft code of practice have now been sent to former Australian Securities and Investments Commission (ASIC) Chairman David Knott for consideration, and the submission which will cause ICA the most heartache has been sent in by none other than ASIC.

The regulator, which will ultimately have to approve or refuse the code, accuses the creators of the code of drafting it “primarily for industry members, rather than consumers”. It also questions what the current benchmarks are for conduct or standards that can be expected from insurers.

In a thinly veiled criticism of ICA’s drafting, ASIC says the code contains a number of unspecified terms and phrases – like “reasonable period”, “promptly” and “have particular regard to” – saying some of these are directly relevant to insurers’ obligations and consumers’ rights.

ASIC also wonders about the draft’s ability to meet current legislative requirements for industry codes and calls for a “more direct drafting style”. It also questions the draft’s use of “soft” language – indefinite words like “shall” and “may”.

But it saves its strongest comments for the provision which would allow insurers to opt out of the code completely when dealing with wholesale products, on the grounds of “variety and complexity”.

“We would like to consider further whether such an unfettered right… is appropriate and whether there are some general insurance products (particularly those used commonly by small businesses) that might be deemed to be ‘retail’ for the purposes of the code.”

On claims, the regulator attacks the broad framing of timeframes, noting that such provisions are only benchmarks and service standards and “are preceded by ambiguous terms like ‘generally’”. It says there has been little progress in this area from the previous code.

It also indirectly supports the Australasian Institute of Chartered Loss Adjusters’ call for proper training for claims-handling staff, noting that it has already called for a review for adequate training and supervision for such people. While the current code calls for adequate training, “this seemingly has not been carried over to the draft code”.

There’s more, much more. ASIC wants the insurers to be much more open and helpful to consumers in areas like flood insurance, informing them of their rights and preventing underinsurance.