The Insurance Council of Australia says it is examining a code of practice independent review report that has proposed more than 100 changes across claims handling, enforcement, assistance for vulnerable consumers and other areas.

“We appreciate the thorough work of the independent panel and the constructive recommendations provided in this interim report,” CEO Andrew Hall said.

“These insights will significantly contribute to the industry’s strategic approach and decision-making processes, as we strive to enhance the way we deal with our customers to align with industry and consumer expectations.”

ICA says it will review the panel’s interim recommendations and engage with members and key stakeholders to prepare an industry response. 

Financial Rights Legal Centre senior policy and advocacy officer Drew MacRae says the initial report is comprehensive and ICA should commit to the recommendations in full.

“The volume of issues and recommendations clearly goes to the point that the general insurance sector has fallen well behind community expectations and there is a significant need for uplift in the code and the way insurers deal with consumers,” he told insuranceNEWS.com.au.

The panel’s initial report, released on Friday, contains 101 formal recommendations, including doubling the maximum financial sanction for significant breaches to $200,000 and extending the code’s reach so all sections would apply to small business.

The General Insurance Code Governance Committee would be able to publish insurer names in compliance and data reports and produce “leader board information” when undertaking thematic reviews, to provide transparency on compliance practices and where improvement is needed. 

On claim handling timelines, it calls for routine inquiry responses made within three business days and “meaningful” updates provided every 20 business days.

When a claim decision has not been made within 12 months – and the delay is not due to the consumer or reasons beyond the insurer’s control, such as a complaint being lodged with AFCA – the code should require that the claim be accepted.

It also makes recommendations around cash settlements and the use of expert reports.

ICA has committed to seeking Australian Securities and Investments Commission approval for the revised code and sought input from the panel on whether specific provisions should be designated as enforceable. 

The review backs ASIC approval but recommends not separating out individual clauses for greater focus, and says instead the code should be incorporated into customer contracts so that commitments are contractually enforceable. 

The code review panel is chaired by former Australian Prudential Regulation Authority deputy chair Helen Rowell and includes consumer expert Gerard Brody and industry representative Paul Muir.

“There is an exciting opportunity to uplift and enhance protections and supports for individual and small business consumers, and my co-panellists and I look forward to working with the insurance industry on its response to our recommendations,” Ms Rowell said.

The second phase of the review will assess feedback on the report and consider information, insights and recommendations from the federal parliamentary inquiry into insurers’ handling of claims from the record 2022 floods.

The code review panel plans to release another consultation paper towards the end of the year. 

See Analysis.