Australia to bring in life reform

Insurance companies in Australia will henceforth be subject to stricter, more transparent consumer protection guidelines as part of the financial services industry’s first ever Life Insurance Code of Practice for consumers.

As a result of the changes that came into practice on July 1, all Australian Financial Services Council (FSC) members must ensure that “strong consumer protections and high standards of customer service” are adhered to, or companies will face a series of penalties.

The new Code covers all aspects of interactions with consumers from product design, buying insurance, regular communications and making claims. The Code requires insurers to improve disclosure to customers, provide greater transparency in communications, decide claims within set timeframes, limit the use of surveillance and provide additional support for vulnerable consumers.

Non-compliance with the Code can result in strong sanctions including a formal warning, asking for a Code compliance audit, requiring corrective advertising or written acknowledgment of a breach to impacted customers, publication of non-compliance on the insurance provider’s website and the FSC website.