Code committee raises concern over drop in significant breach reporting
Subscribers to the Life Insurance Code of Practice reported 25% fewer significant breaches in the 12 months to June 30 from the previous corresponding period, reinforcing concerns that some may not be monitoring non-compliance robustly.
The independent Life Insurance Code Compliance Committee says in its 2020/21 annual report that subscribers reported 33 significant breaches during the period, down from 44 a year earlier.
Under the current code, whether a breach is significant can only be determined by a subscriber using the definition set out in the code and they have 10 business days to report it to the committee.
The committee is similarly concerned that it assessed a record 294 alleged code breaches in the last financial year, three times more than in the preceding period. Many of these were allegations made in prior years when the committee was not sufficiently resourced to review them.
Of all the alleged cases assessed in 2020/21, 104 were determined as code breaches.
“As we have consistently stated in previous annual reports, the committee believes that some subscribers are not adequately reporting all significant breaches of the code,” the committee said.
“Despite the guidance provided in recent years on the need to implement a positive compliance culture, along with robust processes and procedures in place for identifying and reporting significant breaches, we continue to receive a high volume of breach allegations, often against subscribers that report few significant breaches, which suggests under-reporting.”
The committee published a guidance note recently focused specifically on the code’s significant breach obligations.
The guidance will help subscribers to interpret and apply these obligations to ensure they identify and report significant breaches to the committee within the required timeframe.
It also outlines the processes for remediating significant breaches, including the circumstances in which the committee will close a significant breach matter.
The committee says the number of breach allegations received or identified rose 17% to 149 as customer awareness of the code increased.
As in previous years, most of these alleged breaches concerned claims, and complaints and disputes. They accounted for 82% of all breach allegations, with 66% related to claims.
“Given our focus in recent years on subscribers’ compliance with the code’s claims and complaints obligations… it was disappointing,” the report said.
The report says as of June 30, there were 24 subscribers comprising 23 life insurers (including reinsurers) and one non-insurer.
Click here for the report.