Scathing ASIC life insurance findings show Royal Commission still urgently needed
12 October 2016
The release of scathing findings by the corporate regulator into life insurance show that a Royal Commission and an enforceable code of conduct are the only ways to clean-up the industry once and for all, Maurice Blackburn Lawyers said today.
Maurice Blackburn Principal Josh Mennen said today’s reports from ASIC and APRA were another embarrassing wake-up call detailing problems plaguing the industry, with a Royal Commission now the only credible option for reform.
“Both the industry and the Federal Government have repeatedly promised reform for the life insurance sector, but as today’s reports show these efforts continue to fall well short of what is needed to ensure claimants finally get a fair go,” Mr Mennen said.
“Only yesterday the Financial Services Council (FSC) released its own code of conduct - a code best be described as having all the bite of a month-old lettuce. It is little more than a restatement of the law that fails to deal with deep cultural and systemic industry issues.
“The public want real action; they do not want any more excuses or some greenery to hide behind.
“Today’s ASIC report again shows that there remain serious issues with respect to declined claims and claims handling, particularly in TPD claims, with some insurers declining up to 37 per cent of claims.
“The report identifies that particular insurers remain a problem, but does not identify specific insurers against its findings. The public has a right to know who the worst offenders are.
“Insurers clearly are also still not getting the message – ASIC’s report even had to explicitly state that ‘fairness should be given greater consideration by insurers’.
“Fairness should be a given, yet the day after the FSC code is released ASIC says it already needs ‘extension’ and ‘enhancement’ – in other words, the day-old FSC code is already a renovator’s delight.
“The FSC code also doesn’t pass the litmus test - the many examples of mistreatment by insurers highlighted this year would not have been prevented if the FSC code had been in place.
“Enough is enough. Both the Federal Government and the industry have been given plenty of chances to fix these problems but all that we have seen are soft measures that are completely inadequate.
“It is long past time that government and the industry put claimants first with a real and enforceable code of conduct and a Royal Commission,” he said.