The general insurance industry’s new code of practice still hasn’t been ratified by the Australian Securities and Investments Commission (ASIC), and it would probably need surgery before it met all the criteria set by the regulator.

The launch of the new code last week attracted plenty of favourable comment, and the Insurance Council of Australia (ICA) says there are still plans for it to be ratified by the corporate regulator at some time in the future.

ASIC has a statutory power to approve voluntary industry codes of conduct, but not to mandate them. The industry must decide in the first instance whether to develop a code, and then whether to have that code approved by ASIC. The regulator requires codes to:

• be free-standing and written in plain English;
• incorporate a comprehensive body of rules;
• be enforceable against subscribers;
• be developed in a consultative way with key stakeholders;
• be effectively and independently administered;
• be adequately promoted;
• have monitored and enforced compliance;
• contain appropriate remedies and sanctions; and
• be subject to a mandatory review every three years.

ICA spokesman Rod Frail told Sunrise Exchange News the main priority was to have the general insurance code launched. “After so much work we were keen to get it out there and we’ve been really happy with the response.”

Mr Frail says ICA has been in “many discussions” with ASIC regarding the code, and while it did not seek its ratification before the launch, ICA will conduct further discussions on the code.

“We’ll see where that leads us,” he said.

An ASIC spokesman says ICA “decided not to seek formal approval from ASIC but we did have input into code as well as other stakeholders”.

“We were particularly interested in the way ICA handled its public consultation. However, it is a step in the right direction, especially in terms of non-retail general insurance products.

“It is also an acknowledgement of issues such as considering financial hardship as a result of loss or damage, where insurers will respond by fast-tracking claims or making advance payments to alleviate immediate hardship. ASIC is also supportive of the improvement to claims management standards.”

Mr Frail says ICA has decided not to go ahead with a television advertising campaign to promote the code. It recently upset several advertising agencies which were preparing campaign pitches when ICA abruptly cancelled plans for a TV campaign said to be worth $5 million.

The previous code was supported by a $1 million campaign when it was launched in 1994. Mr Frail says there will be only be “some advertising in metropolitan and regional newspapers and certain mainstream magazines”.