The Council of Australian Life Insurers will on Friday take control of the Life Insurance Code of Conduct, which was first introduced in 2017 amid calls for a financial services royal commission.
CALI chief executive Christine Cupitt says the code should help restore trust with consumers by setting out clear timeframes for claims handling and underwriting which they, and industry stakeholders, can hold them to account on. It also precludes insurers from applying blanket mental health exclusions in terms and conditions and outlines support for policyholders experiencing financial hardship.
“In the insurance ecosystem, whether it’s the financial advice professionals, super fund trustees, [or] the insurers themselves through the direct channel, there’s a complete alignment of interests in making sure that consumers have trust and confidence in life insurance, and that it delivers really good outcomes for customers,” Cupitt tells Investment Magazine.
“Building on that aligning trust, we’re very clear in the code that the code applies across all three channels and that – to the extent that it’s the super funds that have the direct relationship or the financial advice professionals that have the direct relationship – the code underpins how issuers need to work with them. And as much as anybody else, they can point to the commitments that we make in the code, how we are serving our members and really hold us to account as part of that process.”
Cupitt acknowledges the role played by the Financial Services Council in establishing and governing the code in its early stages, but says the influence of key insurance executives in the process should not be understated. CALI was established by the nation’s largest life insurers in January as a standalone body after years of membership of the FSC.
“There was a critical role played by the industry association, but equally, the members were really embedded in the process,” Cupitt says. “And it was very important to them, that the code comes across to their new representative body.”
In a statement on Wednesday, FSC chief executive Blake Briggs said he was proud of the association’s work on the code. “As the landscape of industry representation has evolved in the last few years, it has become evident that transferring the life code to CALI is the appropriate step forward, and we are confident that life insurers will be well-served by the new association’s responsibility for the life code,” he said.
Briggs added that the FSC would continue to be a prominent voice on relevant policy issues including “increased political and regulatory scrutiny surrounding group life insurance in superannuation”.
The Albanese government has blasted super funds and insurers over allegedly poor communication with members relating to group insurance, alongside a rise in complaints over claims handling.
“For insurance in superannuation to achieve its desired benefits, the insurance sector needs to lift its game,” Jones told the Investment Magazine Group Insurance Dialogue in July. “Members have to come first.”
Asked to respond, Cupitt says the message has been received by insurers loud and clear.
“The nature of life insurance is that we’re going to be interacting people through the most difficult times and when they’re the most vulnerable,” she says. “We have a special level of care and responsibility that we need to demonstrate in working with customers and client and members at claim time.
“There’s always work that we can do to improve systems and processes to better support customers. And, of course, when the minister stands up and points to an area that he would like to see improvement, [the] industry takes that very seriously.”
Cupitt says it has been engaging with the government on the effort to legislate an objective for super and was pleased to see mentions of group insurance in the explanatory memorandum surrounding draft legislation.
The latest round of public consultation on the objective of super concludes on Friday, with submissions responding to the draft legislation due to be filed to Treasury.