Recommended changes to the General Insurance Code of Practice should not be overshadowed by a debate on an independent governance framework, a leading consumer advocate warned today.

The 2012/13 review of the code, compiled over the past year by lawyer Ian Enright, was released by the Insurance Council of Australia (ICA) on Friday.

Many of its 60 recommendations are linked to the formation of a “code governance body”, which Mr Enright says should be “independent, expert, informed and resourced”.

It would be made up of three independent members, with the insurance industry and consumer movement represented by one person each. Associated committees with minority industry representation would set policy and oversee promotion of the code, industry education and training.

But ICA says in a statement accompanying the report that its members “believe it is important for [the council] to retain the responsibility for developing industry policy, including code content”. 

“ICA has the experience, relationships and resources to enable it to consult widely with its members and external stakeholders, and to determine the appropriate framework for industry self-regulation under the code.

“For the same reasons, ICA and its members will continue to take responsibility for financial literacy programs and staff education and training.”

Consumer sources told insuranceNEWS.com.au the governance issue should not overshadow the code recommendations, “where real progress can be made”.

Mr Enright recommends a refurbished code in plain English “that has principles, standards, guidelines and service levels”.

The recommended new guidelines focus on such areas as financial hardship, internal dispute resolution, claims and natural disasters. Mr Enright says they are “designed to give all stakeholders more consistency and quality of experience with general insurance”.

Consumer Credit Legal Service director Denis Nelthorpe says the changes to the code operation “bring some clarity to issues that have been discussed between consumer groups and the industry – issues such as third-party debt and claims”. 

“A lot of the governance framework issues have already been resolved,” he said. “It’s important not to lose focus on the operational changes.”

Mr Nelthorpe says he hopes ICA’s decision to produce a revised draft code by October will see Mr Enright’s recommendations on the operation of the code preserved.

“The key questions is, will they implement it?” he said. “ICA needs to show support.”

Industry sources contacted by insuranceNEWS.com.au say some of the provisions of the code will have been strongly resisted by ICA’s smaller members.

“Some of them found the old code pretty hard to take,” one source said.

Also see ANALYSIS