The redrafted insurance code of practice doubles the penalty for breaches to $200,000 and targets claims processes that last more than a year, but consumer groups say it falls short of expectations and fails to address inquiry recommendations.

The Insurance Council of Australia released its draft for comment today, along with good practice guidance for identifying and taking extra care with vulnerable customers.

As reported in a Breaking News bulletin, the code will be contractually enforceable and will require automatic acceptance of home and motor claims after 12 months when no decision has been made, subject to defined exceptions.

Financial Rights Legal Centre principal for policy development Drew MacRae says making the code enforceable is positive, but the redraft waters down some commitments and fails to address many code review and parliamentary flood inquiry recommendations.

“The recommendations from those two reports really were the expression of consumer expectations arising out of a general failure of insurers to act appropriately in claims handling, and it’s super disappointing that they haven’t met the moment there,” he said.

The vulnerability guidance should be in the code and provide clear industry-level commitments, he says.

“The guidance is purely aspirational, it’s not enforceable in any way and doesn’t systematically define what minimum standards should be applied,” he told insuranceNEWS.com.au.

Consumer Action Law Centre assistant director Meg Dalling says while there are a handful of improvements, there are more clawbacks, including shifting protections for vulnerable consumers into the guidance.

The Australian Consumers Insurance Lobby has written to Financial Services Minister Daniel Mulino – who chaired the floods inquiry – calling on the government to establish an independently administered framework overseen by the corporate regulator.

“Self-regulation is a privilege, not a right. The industry’s latest redraft demonstrates that it has failed its final opportunity to prove it can regulate itself in the public interest,” chair Tyrone Shandiman said.

An independent code review, launched in November 2023, delivered more than 100 recommendations in late 2024, many overlapping with flood inquiry proposals.

ICA began the redraft early last year and says the process has involved extensive industry engagement and “deep, targeted” external consultation.

CEO Andrew Hall says the redraft provides more consumer protections and practical changes that put the customer first.

“We want this code to be the strongest it can be, and we look forward to hearing from anyone with feedback before consultation closes on July 21,” he said.

The documents are available here.