Scathing PC report slams deficient insurance code of practice, sends blunt message that industry must act
29 May 2018
Today’s Productivity Commission superannuation report has delivered a scathing assessment of the insurance industry’s voluntary code of practice, putting the industry bluntly on notice that it can no longer ignore the need for a rigorous code according to Maurice Blackburn Lawyers.
Maurice Blackburn Principal Kim Shaw said today’s report reiterated consumer advocates’ many concerns about the code, including that any code must be binding, with ASIC or administrator enforceability and include standard definitions with appropriate transparency.
“For months the industry has resisted calls to strengthen its code – the Federal Minister has repeatedly put the industry on notice that it needs a strong code as have consumer advocates, and today the Productivity Commission has joined that group in sending a blunt message that the industry must act,” Ms Shaw said.
“It is clear from today’s report that the industry’s continuing defence of a code that can best be described as having all the bite of a wet lettuce is no longer going to cut it.
“The industry have been given this message repeatedly but ignored it - our firm and the Consumer Action Law Centre wrote to funds earlier this year giving the code a ‘D minus’ assessment: a good first effort with significant room for improvement, with an invitation for them to join us in working to make the code more acceptable.
“Today’s report undoubtedly confirms that assessment.
“As the report makes clear, the code of practice is in urgent need of strengthening if it is to do the job required to improve outcomes for members and rebuild trust with consumers.
“This must include standard definitions and consistency so members are informed about their cover before they make a claim and it must also be a code with tailored benefit design that puts the needs of members’ first, rather than putting the needs of the industry first.
“Enforceability is urgently needed, and we support calls today for the code to be strengthened to meet ASIC’s definition of an enforceable code and for an ASIC and APRA taskforce to monitor and report on adoption and implementation of the code.
“As today’s report shows, communication and transparency with members is also key and something we have long called for, including ensuring that members are informed about adjustments being made to their funds and have a proper understanding of their product.
“The insurance industry can no longer ignore deficiencies in its code – it must act now to strengthen the code in ensuring it genuinely improves the industry for consumers,” she said.