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ICA backs code vulnerability changes, flexible claim time frames

The Insurance Council of Australia’s submission to the code of practice review supports changes around financial hardship provisions and vulnerability, while seeking more flexibility on providing claims updates. 

CEO Andrew Hall says the submission, drafted in consultation with members, proposes “sensible and workable solutions” to strengthen the code while maintaining its operational efficiency and effectiveness.

“We believe these proposals would see the code continue to prioritise customer protections while remaining responsive to our changing regulatory landscape and operating environment, which is still providing some of the most challenging circumstances for insurers and their customers ever seen,” he said. 

ICA says it supports a principles-based code to allow insurers the flexibility to offer support and solutions tailored to customers’ particular vulnerabilities and circumstances. 

Proposed changes include expanded definitions of vulnerability for greater inclusion of LGBTQ+ customers and to recognise the impact of financial abuse and trauma, and improved identification of people most at risk of financial abuse and trauma, particularly after catastrophes. 

The submission recommends expanded review time frames for claim decisions, particularly those made following catastrophic weather events, and proposes changes to paragraph 70 requiring a claims update at least every 20 business days. 

“Our members are firmly of the view that if greater flexibility could be afforded to how code subscribers may communicate meaningfully with their customers about the progress of their claim, the resources focused on responding to code paragraph 70, and the customer complaints that might follow, could be reallocated to other activities that could contribute to enhanced claims customer experience outcomes,” it says. 

ICA does not support publishing the names of subscribers that have breached the code in annual reporting using the current method utilised for de-identified data, but it suggests there could be a new approach to highlight good performers and to provide a positive incentive. 

It plans to have the updated code approved by the Australian Securities and Investments Commission, but says designating some clauses as ASIC “enforceable” provisions could create a “two-tiered” code. 

The submission suggests proposed code changes should wait until several other reviews and their recommendations are finalised. 

Other inquiries include the federal parliamentary inquiry into insurers’ handling of the 2022 floods, which is due to report by the end of September. A select committee inquiry into the impact of climate risk on insurance premiums and availability is due to present to parliament by November 19. 

ICA has also asked Deloitte to undertake a follow-up review of the industry’s response to the report it initially commissioned on the 2022 floods. 

“The follow-up implementation review is scheduled to be completed later this year and we intend to share the findings, as they might assist the review panel’s thinking,” ICA says.