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Issue 30 - July 2017

New Life Insurance Code of Practice


The Life Insurance Code of Practice came into effect on 1 July 2017. It will be monitored by an independent body responsible for ensuring subscriber compliance with the Code, the Life Code Compliance Committee (LCCC). The Code Compliance and Monitoring team will be the administrator for the LCCC in addition to the work it already does for four other code compliance committees across the financial services industry.

The Life Insurance Code was developed by the life insurance industry to promote consistently high service standards and set a framework for professional behaviour and responsibilities to protect consumers.

The new code covers many aspects of a customer’s relationship with their insurer – from buying insurance to making a claim and providing options to people experiencing financial hardship or requiring additional support.

It is binding on life insurance companies who are members of the Financial Services Council and any other industry participant that formally adopts the Code. For a current list of code subscribers go to https://www.fsc.org.au/policy/life-insurance/code-of-practice/.

The new code also sets new minimum standard medical definitions for cancer, heart attack and stroke for use in trauma/critical illness policies. They were developed with the help of medical professionals and will be under continual review to ensure they keep up with advancements in medical science.

The code of practice was recommended in the 2015 Trowbridge Review into the life insurance sector and followed media reports and an ASIC investigation that outlined how insurers used out-of-date medical definitions to deny claims.

It requires insurers to improve disclosure to customers, provide greater transparency in communications, decide claims within set timeframes, limit the use of surveillance and help vulnerable consumers.

Section 7 of the code says: ‘We will have processes in place to train our staff to help identify and engage appropriately with consumers who are having particular difficulty with the process of buying insurance, making an inquiry, making a claim or making a complaint, or who may not be capable of making an informed decision, and to refer these consumers for appropriate additional support where required. We will take into account someone’s capability when making decisions that impact them.’

The independent chair of the Life Code Compliance Committee is the former chair of the Australian Press Council, Professor David Weisbrot, who is an Emeritus Professor of Law and Honorary Professor of Medicine at the University of Sydney. Other members are experienced financial services and governance and risk management practitioner David Goodsall (industry representative) and principal solicitor of the NSW-based Financial Rights Legal Centre, Alexandra Kelly (consumer representative).

The code was developed by the Financial Services Council following public consultation.

For more information about the new code visit: www.fsc.org.au/policy/life-insurance/code-of-practice/life-code-of-practice.pdf.

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