Life insurance code ‘not for advisers’, says FSC

At a media briefing for its revised draft Life Insurance Code of Practice in Sydney on Monday, FSC senior policy manager Nick Kirwan told the audience that it received quite a bit of feedback from the adviser community on the first iteration of the code.

However, Mr Kirwan said the FSC wasn’t able to include most of the things requested from advisers from the first iteration of the code, and hasn’t included much in the current iteration.

“Bluntly, it isn't a code for advisers. It is a code for life insurers. It's a code for superannuation trustees and it covers the things that life insurers do, and it covers the things that superannuation trustees do, which are different for those customers,” Mr Kirwan said.

“But we recognise that if we have a better customer experience and customers can come to life insurers and approach it with more confidence that they will be treated fairly through the underwriting process. They will be treated fairly through the claims process. And they don't always need to get legal advice every time they do this.

“That would be a better experience for advisers as well. We genuinely believe that. And of course, we look forward to any consultation feedback they'd like to give us.”

FSC chief executive Sally Loane said the revised code shows that it’s listening and acting on the concerns and issues raised by ASIC, the parliamentary joint committee inquiry and the Hayne royal commission hearings.

“The proposed new code is designed to lift standards in product design, sales, underwriting, customer service, complaints and claims handling, just to name a few,” she said.

“More than 30 significant changes have been made to practices that govern the way our member life insurers will treat consumers under the new code.”

Some of the proposed changes to the FSC’s Life Insurance Code include:

• Banning pressure selling of products and coercive retention tactics;
• Banning medical disclosure checking without reasonable grounds;
• Ensuring customers are no better or worse off at claim time (excluding fraud);
• Improving funeral insurance to ensure people understand what they are buying;
• Separating consumer credit insurance (CCI) from credit product sales;
• Binding trustees of superannuation funds to the code;
• Extending coverage of the code to include all life insurance distributors; and
• Reforms to underwriting, claims and mental health.

Mr Loane said the FSC will hold three public meetings in Melbourne, Brisbane and Sydney.

“In addition to the public forums, we will hold consultations to engage with the mental health community, Indigenous groups, religious support agencies and the broader consumer movement,” Ms Loane said.

“We will ask ASIC to participate in these stakeholder consultations, to provide their perspectives and to ensure the engagement is effective.”

Adrian Flores

Adrian Flores is a deputy editor at Momentum Media, focusing mainly on banking, wealth management and financial services. He has also written for Public Accountant, Accountants Daily and The CEO Magazine.

You can contact him on [email protected].