Some insurers still do not take seriously their obligations to comply with the voluntary code of practice, Lynelle Briggs, the Chair of the General Insurance Code of Practice Governance Committee, has warned.

In a call today for “decisive action”, she says the industry “now needs to step up, improve its game and take the code more seriously”.

“Compliance failures need to be addressed, not just given lip service. Subscribers should take a broad view when interpreting the code’s standards, guided by the purpose and spirit of the code, rather than seeking to limit their application or downplay their importance.

“There is evidence… that not all subscribers are taking the code and its obligations as seriously as they might.”

The committee’s annual report, released today, notes a number of worrying trends.

Compliance frameworks used by some insurers remain very weak and point to a poor understanding of the code’s meaning and obligations to report breaches within 10 days of business identification.

Of particular concern to the committee is growing evidence that some have engaged law firms to interpret the code’s financial hardship standards “as narrowly as possible”.

Some insurers have also taken to using black-letter law in response to the Hayne royal commission.

“The code is part of the broader consumer protection framework,” Ms Briggs says. “Its purpose is to improve standards of service provided by subscribers, which means subscribers are expected to go beyond the ‘black letter of the law’.”

She urges the Insurance Council of Australia to “fully leverage” the Hayne royal commission’s proposals – which include applying and levying sanctions on subscribers – to strengthen the code.

According to the report, last financial year saw 11,663 self-reported breaches. Further investigations and monitoring led to another 89 breaches being reported and the committee dealt with 22 other significant breaches.

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