LIFE INSURANCE CODE OF PRACTICE – THE MUSICAL

Financial Newswire’s life/risk expert and commentator, Col Fullagar, is seeking the views of advisers and others on how to improve the Life Insurance Code of Practice arguing that, up to now, he has found it underwhelming.

The Life Insurance Code of Practice (the Code”) came into effect with much fanfare on 30 June 2017. With effect from 1 July 2023 with absolutely no fare at all, it was upgraded, or arguably the opposite depending on your perspective.

For those sufficiently brave enough to seek cynical-insight into these two vintages, please feel free to visit the Integrity Resolutions website, go to Published Articles and click on:

• Life Insurance Code of Practice – Ideal or Idiotic (20 November 2017); and
• Life Insurance Code of Platitudes (19 September 2023)

Not satisfied with double-dipping, the Code Custodians are evidently about to give it yet another go. Yes, you heard right; submissions are being sought with a close-off date of 15 December.

Is the Code in need of further attention or is it doing a simply stellar job? In response, reference is made to an excerpt from the above 2023 article:

“In an attempt to gauge the impact of the Code, a Google search was undertaken under “Impact of Life Insurance Code of Practice”. Strangely, nothing came up which from the perspective of some, arguably many, may in fact represent a reasonable search outcome or, if you like, it would be a brave person who could confidently say the life insurance industry is better ….. than it was 6 years ago.”

Coming out of this, there may be a concern that making a submission now will prove as effective as leaving comment on a restaurant website, but dare it be suggested there is much more at stake here.

The author of this article has often argued that if the Code lacks impact who better to blame than those who drafted it ie the life insurance companies. Lack of impact examples might include:

• Section 5.64 assures claimants to be of good cheer because “ …. If we find out that your payment will be late due to unforeseen circumstances, we will tell you within 5 business days of finding out”
• And, in support of the Reasonable Rumba or the Jibber Jabber Jive, Section 5.14 “ … we will respect your privacy by only asking for information we reasonably need ….” and Section 5.13 “We will ask for the information we reasonably need from you and third parties as soon as possible …” Not that there is any doubt but, yes “reasonable” is assessed by the insurer

and a personal fav;

• Sections 5.40 to 5.44 assures claimants, amongst other things, that if surveillance is undertaken it will not continue for longer than 4 months (even PI’s need a break) and illegal methods and threats to people will not be used (or even considered).

Sadly, exacerbating the apparent lack of impact, the Code also falls short of pragmatic protections for those on claim. Two examples of questionable tactics:

• A current income protection insurance claim where the insurer, albeit it was provided tax returns each year, waited more than 8 years before undertaking a reconciliation and proceeding to advise the claimant there had been alleged overpayments totalling in excess of $100,000 which the insurer now wanted paid back;

And, in regard to a TPD claim

• The insurer issued a procedural fairness letter which provided a response deadline date. The claimant engaged an advocate to assist. An email to this effect was received by the insurer several days prior to the deadline date requesting a time extension. Recognising the importance of procedural fairness, the insurer ignored the request and proceeded to decline the claim. When asked why, the insurer responded “We were progressing the claim to give the client a timely outcome”

“Who should have drafted the Code that it would have impact?” you ask …….

“Those who have been and continue to be the recipients of insurance company conduct ie those who have claimed and/or continue to claim and/or those who represent them such as financial advisers and yes, solicitors” is answered ……

So here’s the rub; Mike Taylor, the esteemed Managing Editor of Financial Newswire has been approached and without the application of any illegal or threatening tactics apart from the usual array of photos and call recordings, Mike has agreed to throw open to his readers the opportunity to provide suggestions in regard to additions and changes that could and should be made to the Code. Or, if you like:

• In what way would you the reader want to see the conduct of life insurers change? or
• On behalf of your claimant clients, what feedback and suggestions would you like to pass on.

All input, serious or otherwise will be considered, collated and submitted, and, as an added incentive special awards will go to the suggestions:

• Most UNLIKELY to be agreed to by the life insurance companies;
• Most LIKELY to be applauded by those on claim or making a claim;
• Which, if implemented, might make the most positive impact on the perception of the life insurance industry; and
• Which, if implemented, might lead to the greatest improvement in the transparency and accountability of life insurance companies.

Who knows, one lucky contributor might win all the awards with a single suggestion …………

PS If you are wondering as to the article title LIFE INSURANCE CODE OF PRACTICE – THE MUSICAL ……. well, it’s because …… wait for it ……. it’s up for a Revue !!