The new Life Insurance Code of Practice (Life Code) took effect from 1 July 2023.
The Financial Services Council (FSC) first announced in October that further consumer protections would be included in the new Life Code and confirmed the inclusion of guidelines on family and domestic violence as well as new protections in the genetics moratorium.
In conjunction with the announcement, the Council of Australian Life Insurers (CALI), whose 19 members adhere to the code, said it is currently collaborating with the FSC to transition governance of the Life Code to CALI by 30 September.
CALI also disclosed that as part of the revised guidelines, stronger authority would be afforded to the Life Code Compliance Committee (LCCC), which is responsible for monitoring the life insurance industry’s application of the Life Code and the conduct of individual insurers.
Namely, LCCC will have increased power to impose sanctions and financial penalties on organisations subscribed to the Life Code, a measure CALI said has been developed in conjunction with consumer groups to ensure they are appropriately robust.
Commenting on the transition, CALI chief executive officer Christine Cupitt said the revised code will help ensure the life insurance industry is “accessible, understandable, and trusted”.
“Australian life insurers have listened to the needs of their customers and the community by developing an updated Life Code that sets a higher bar for the industry,” Ms Cupitt said.
“The new Life Code will deliver better outcomes for Australians, tougher penalties for conduct breaches, and strong independent enforcement.”
The updated version features 50 additional consumer protections, including increased support for customers experiencing vulnerability or financial hardship, guidelines for the development of family violence policies, and the removal of blanket mental health conditions.
“With this newly updated Life Code, our members can continue to deliver the protection and certainty Australians need on their best and worst days,” Ms Cupitt added.
“CALI is committed to ensuring Australians have peace of mind about their financial and overall wellbeing as they face life’s biggest challenges. We want to expand their access to the life insurance protection that suits them when they need it most, in an accountable and transparent way.”
Speaking on the recent development, the FSC clarified that the new protections also encompass product design, sales practices, and claim processes.
“Notably, the New Life Code includes vital safeguards for customers during periods of vulnerability, financial hardship, or when experiencing mental health conditions,” the body said in a statement on Friday.
“The industry is committed to prioritising consumer interests and ensuring transparency and fairness in life insurance services.”
Along with the launch of the New Life Code, FSC announced the release of a detailed guide on life insurance law that outlines the most important legal rights and obligations for life insurance customers, as well as a consumer fact sheet that details key information about life insurance premiums.
