Consumer representatives will now be involved in the development of the Life Insurance Code of Practice after questions were raised about the life insurance sector's ability to self-regulate, FSC chief executive Sally Loane announced today.
In opening the FSC Life Insurance Conference Ms Loane said that the change was made to strengthen consumer protections in the code.
"In order to ensure consumer protections are even stronger, we have added a steering group to our code development process which will include consumer representatives, the Financial Rights Legal Centre and the Consumer Action Law Centre, as well as senior life insurance executives," she said.
"The consumer representatives will work closely with our members to identify where we need to strengthen consumer protections in our code."
The Life Insurance Code of Practice is set to be implemented by 1 July 2016. Compliance will be monitored by an independent committee of experts, including a consumer representative, Ms Loane said.
While the draft code as it stands today is a "robust document, with good consumer protections," it may need to be updated with feedback from consumer representatives, she said.
"We won't rush out with something that's underdone, however we recognise the imperative of getting our code in place sooner rather than later.
"The code has always been an important part of our commitment as an industry to strengthen community trust and confidence in life insurance," she said.
"We have a responsibility to be a more customer-centric industry than we have been in the past."
Ms Loane acknowledge that people had been "let down and trust had been damaged" and said that institutions had attempted to rectify this.
"I deeply regret this has happened. We are working hard with all of our members to rebuild trust and confidence in life insurance.
Many of our members have moved quickly to instigate their own internal reviews, particularly into denied claims and policy definitions," she said.
Ms Loane also said that it was looking at ways to better manage the experience of "vulnerable consumers" who may have difficulty buying insurance or making a claim.
"This could include identifying and supporting people suffering from mental illness, elderly customers, those who require the use of an interpreter, people living in remote communities, or those customers with very low levels of literacy," Ms Loane said.