The Insurance Council of Australia anticipates a 24-month transition period for its updated code of practice, which will be made enforceable through contracts.

The period will give insurers time to adjust to contractual enforceability in product disclosure statements, implement code changes, update systems and manage consumer policies and annual renewals, it says.

ICA released the draft last Wednesday and has called for submissions by July 21. It will then engage again with stakeholders and vulnerable communities before submitting an updated version to the Australian Securities and Investments Commission for approval.

CEO Andrew Hall says the redraft provides more consumer protection as the code keeps pace with changes including increasingly frequent extreme weather, more complex claims and technology that is reshaping every part of the insurance process.

“For the first time, insurers’ key commitments under the code will be legally enforceable, claims left undecided after 12 months will be automatically accepted, and new vulnerability protections provide greater support for customers who need it most,” he said.

Consumer groups have criticised the placement of extra care guidance for vulnerable customers into a separate document and have raised concerns that enforceability through contracts may come with a winding back of some protections.

Financial Counselling Australia national co-ordinator for disaster recovery Louise Hayes says vulnerability obligations should be strengthened through mandatory requirements in the code.

“In the absence of a mandatory sector-wide uptake of the proposed vulnerability guide, the sector is relying on a ‘hope strategy’ that insurers will implement the guide – and hope is not a strategy, it is merely dot points on a page,” she said.

The Association of Insurance Building & Engineering Consultants says draft changes relating to claims handling are moving in the right direction and provide more clarity around roles, with a definition added for claims fulfilment providers.

“The carveout for ‘claims fulfilment providers’ is an important acknowledgment of the distinct roles played by builders, restorers and repairers compared with independent experts,” CEO Tony Libke said.

The draft is available here.

See ANALYSIS.