If the Hayne royal commission gave the insurance industry added impetus to update and improve its codes of conduct, COVID-19 applied the handbrake. 

The focus had to be on maintaining service levels, helping newly vulnerable customers and managing remote workers. 

Indeed, a June 2020 Roy Morgan report found that almost 60 per cent of workers in insurance and finance worked from home during the pandemic.

Behind the scenes, though, insurance associations have been hard at work drafting new codes, conducting reviews and gathering feedback. 

As working life returns to near-normal in Australia and New Zealand, insurance professionals can expect to see the final versions roll out, and work can begin on developing the systems and processes required for best practice.

While some of the code timelines may have been extended, it’s important to note that customers are still protected by previous code versions.

‘It is only reviews of these codes that have been delayed,’ says Sally Davis, general manager of the Australian Financial Complaints Authority (AFCA) Code Compliance Monitoring Committee. ‘In the case of all three Australian codes, robust codes already exist and have existed for some years.’

NEW ZEALAND’S FAIR INSURANCE CODE

New Zealand’s Fair Insurance Code was first cab off the rank, with its updated version coming into effect on 1 April 2020.

Tim Grafton, chief executive of the Insurance Council of New Zealand (ICNZ), says: ‘New Zealand’s Fair Insurance Code is an evolutionary document. 

‘We consulted widely with stakeholders and consumers to both develop it and to update it. Consequently, insurers already had a high degree of familiarity with the document, and we are confident that they are up to speed with the fundamentals.’

Key changes were clarifications on how insurers should act in the customers’ interests and develop and sell products responsibly.

‘We did a major revision of the Code in 2015/16 and introduced timeframes for responding to claims and complaints for the first time,’ says Grafton. 

‘Through that period, we learned that we needed to clarify when the clock starts ticking on a claim or complaint, and when a complaint is a complaint — for instance, when a customer expresses dissatisfaction but doesn’t actually say they are making a complaint. 

‘An insurer should ideally respond then and there for an early resolution of issues, to the customer’s satisfaction. There are pressures in the system to make sure the insurer responds as soon as it can, including issuing deadlock letters.’

Grafton says the ICNZ didn’t encounter any delays related to COVID-19 in implementing the Code because of the way the changes occurred.

‘There were well-signalled enhancements that were widely distributed in 2019 when the Code was approved, so there was several months’ lead-in time pre-COVID-19.

That gave insurers time to update their systems and processes ahead of 1 April. We also followed up with webinars and guidance on areas that needed clarification.’

However, the New Zealand insurance industry still needed to respond to the pandemic and the new challenges facing customers.

‘While the Code didn’t contemplate COVID-19, at the advent of the pandemic we didn’t just say that the Code covers it,’ says Grafton. 

‘We set up a working group of members to share best practice and learnings, especially relating to financial vulnerability, because the Financial Markets Authority [FMA] identified this as a focus at that time.

‘In March 2020, we had a remote board meeting and AGM and focused on our COVID-19 response. We agreed on a set of principles members would apply. 

‘Anticipating general financial hardship among customers, brokers and suppliers, these principles allowed insurers to respond in the most appropriate way. 

‘This included prompt or seven-day payment; 120-day deferment for broker payments; special hardship funds; and even reimbursements of motor insurance premiums for customers now working from home.

‘Insurers had a range of ways to respond, and we were able to continue the conversation with the FMA and the Reserve Bank of New Zealand (RBNZ) and assure them of the steps we were taking to support the community.’

According to Damian Falkingham, ANZIIF’s general manager, industry engagement, the Fair Insurance Code encourages good conduct and sets the standard for professionalism and best practice for insurers in all dealings with customers.

‘ANZIIF has partnered with the ICNZ to develop an educational professional development activity called Understanding the Fair Insurance Code,’ he says.

‘This educational resource not only provides New Zealand insurance professionals with an in-depth understanding of their responsibilities and obligations under the Code, it also puts them in the customer’s shoes. 

‘The activity implements real-life workplace scenarios, which encourage professionals to identify situations where a breach of the Code may have occurred.’

AUSTRALIA’S GENERAL INSURANCE CODE OF PRACTICE

Among the Australian insurance codes of conduct, the General Insurance Code of Practice is closest to being fully implemented.

‘Key consumer provisions in parts 9 [Supporting customers experiencing vulnerability] and 10 [Financial hardship] of the 2020 Code came into effect on 1 January 2021, and Code subscribers will have completed their transition to the 2020 Code by 1 July 2021,’ says a spokesperson from the Insurance Council of Australia (ICA).

 The implementation of the full Code was impacted by COVID-19, with the final deadline delayed by six months. The ICA says: ‘Like most businesses, insurers are deeply affected by the pandemic. They need to concentrate on providing urgent services to their customers.

‘The industry’s focus is on ensuring its resources are harnessed to help all customers, including those who are experiencing financial hardship, vulnerability and family violence during COVID-19 and the post-natural disaster season of 2019/20.’

This has meant that insurers have had to double up: adapting to the pressures of the pandemic, while developing the updated systems and processes required by the new Code. This includes meeting a range of new standards for investigations, consumers experiencing vulnerability and a streamlined complaints process.

‘The ICA has been engaging closely with members during the transition period,’ says the spokesperson. ‘Insurers are focused on relevant training, systems changes and the identification and resolution of any implementation issues, before the start date of 1 July 2021.

‘The industry is also working on royal commission reforms and the Australian Securities and Investments Commission’s [ASIC] requirements for it to have an internal dispute resolution system in place later this year.’

The family violence policy provision was one element of the new General Insurance Code that was not delayed.

‘Paragraph 95 requiring subscribers to have a family violence policy available on their website came into effect on 1 July 2020,’ says AFCA’s Davis.

‘The General Insurance Code Governance Committee has assessed compliance with this requirement and has published a report of its findings. In summary, there was a high level of compliance with this provision by subscribers to the General Insurance Code.’

Falkingham notes that together with ANZIIF, the ICA launched educational training on the General Insurance Code in 2019. Now he points to a new online course to help with professional development related to the codes of conduct.

‘ANZIIF’s education team recently developed a short online course called Building Integrity, which aims to address issues of conduct and culture in the insurance industry,’ he says. 

‘The course includes case studies and customer journey scenarios to explore what the issues are, the consequences that result from these issues and how we as an industry can work towards improving outcomes for our customers.’

INSURANCE BROKERS CODE OF PRACTICE

Dallas Booth, CEO of the National Insurance Brokers Association (NIBA), says his organisation is in the middle of its Code review.

‘It has taken longer than expected with the royal commission in 2018/19 and the development of the General Insurance Code. We always wanted that to go first. We needed to develop a legal framework post-royal commission and take into account all matters,’ he says.

‘In our initial consultations with stakeholders, AFCA’s comments were that it would like to see greater clarity in undertakings and disclosure of remuneration, and we’re taking this feedback on board.’

Booth says the NIBA board did a lot of work in the second half of 2020 and completed a draft Code of Practice, which was given to internal reviewers. 

‘The reviewers have taken the suggested position forward in a public consultation process. This was scheduled to take approximately three months, to March 2021. The reviewers will then report back to the NIBA board on the responses and feedback from the consultation.

‘Following this, we are looking to finalise the Code in July 2021, and we will consider implementation timeframes after the details of the Code have been settled,’ says Booth. ‘This will also include ASIC approval of the new Code and we’ll continue to liaise with ASIC as we progress.’

Booth says COVID-19 hasn’t had a real impact on the content of the Code, but NIBA will be mirroring the General Insurance Code’s provisions relating to vulnerable customers. ‘No matter whether a customer contacts an insurer directly or a broker, they will have similar protections,’ he says.

‘The Brokers Code will complement the General Insurance Code, working together to deliver to customers.’

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