Consumer advocates say the life industry code is “actively contributing” to problems facing policyholders and fails to meet community expectations.

Merely adding more commitments will not address the issues, they warn in a joint submission to Peter Kell, who is leading a review of the code.

“This life code review is therefore an opportunity to take stock and for life insurers to lift their game,” the Financial Rights Legal Centre said on behalf of the Consumer Federation of Australia.

“This submission builds a case that the current life code – and the ‘promises’ life insurers make to [their] consumers within – has fallen behind community expectations and is in fact actively contributing to the problems they face.”

Issues flagged include a lack of “practical” limits on medical examinations; document requests that add to delays and stress; and inconsistent application of protections for insureds.

The submission says responding to 132 recommendations it makes “is only part of the solution to raising consumer confidence in the sector”.

Insurers must “do more than add further commitments to a code they have been shown to be systemically breaching. The life code must be made enforceable as a term of the contract with the consumer to appropriately incentivise subscribers to meet the promises they make.”

The consumer advocates say the code should be approved by the Australian Securities and Investments Commission.

“What is required in the face of a hard-nosed, contract-based financial product is hard-nosed, contract-based enforceability. Only then can consumers begin to rebuild trust in a sector that has systemically contributed to and exacerbated the trauma that life insureds and their beneficiaries regularly experience.”

The advocates’ recommendations cover areas including mental health; vulnerable consumers; Indigenous communities; medical definitions; and conduct of third parties such as claims assessors.

They say the code should include a provision that sex work is treated like any other occupation in determining cover offered, and that insurers will not impose exclusions or set premiums based purely on a history of doing such work.