Better systems and more extensive employee training should be part of life insurers’ strategy this year, as they prepare for revisions to the Life Insurance Code of Practice.

The changes will see more than 50 additional consumer protections come into play, taking effect from July 2023 as part of the industry’s commitment to providing consumers with fairer treatment and more consistent service. They build on the recommendations of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry that targeted a range of industry issues, including conflicted remuneration relating to life insurance products.

Spiro Premetis, acting CEO of the Financial Services Council (FSC), which develops the Code in Australia, says insurers should focus on three main areas — processes, systems and staff training. 

“We have worked closely with the industry, so they are all familiar with the changes and we have held regular working group meetings to resolve any implementation questions that have arisen,” he says.

Premetis says the new Code will provide greater support for vulnerable consumers, such as by “defining gratuitous concurrence” and ensuring consent is genuine for First Nations people, “as well as banning blanket mental-health exclusions in the standard terms and conditions on all newly designed contracts”.

Clyde & Co. special counsel Anna Morris, a life insurance claims expert, agrees that systems and training will be crucial, noting that the Australian Securities & Investments Commission (ASIC) has “already put the industry on notice about concerns of unwarranted use of physical surveillance and unjustified non-disclosure investigations in disability claims”.

“With claims handling now a regulated financial service, life insurers ought to take measures to ensure their systems are able to capture necessary data and monitor ongoing compliance with the Code provisions,” she says. “Claim assessors need to be trained and assessed on their understanding of the new claim provisions in the Code as the implications for systemic or repeated non-compliance could also be grounds for regulatory action.” 

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