Insurers and consumer groups are at odds over claims and dispute-handling standards in their submissions to the review of the General Insurance Code of Practice.

The groups are divided on the controversial issue of whether claimants should be notified about internal dispute resolution (IDR) and external dispute resolution (EDR) systems at the time of claim lodgement, with insurers protesting such an arrangement would create an expectation that a claim will end up in a dispute.

The 69-page submission from the NSW Insurance Law Service (ILS), made with contributions from Legal Aid Queensland and Victoria, community legal centres and financial counselling representatives, also wants unresolved claims sent to IDR after four months, while insurers want to retain flexibility on such arrangements.

Insurers also reject time limits on the finalisation of claims once they are accepted.

The issue of whether code membership should be compulsory for all insurers or voluntary also divides insurers and consumer groups. Nor is there consensus on whether insurers under investigation for code breaches should be named.

IAG supports a number of the recommendations, but prefaces its submission by saying that changes to the code “should only be made where there is evidence that the code is not effective or does not adequately address a particular problem and where the benefit of change to consumers and other stakeholders is justified as against the implementation cost to industry”.

Noting that changes were made to the code last year in response to the 2010/11 natural disasters, IAG says it “does not believe further changes to the code to deal with issues arising from these disasters are necessary”.

See ANALYSIS