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Some life insurers under-reporting code breaches

Mike Taylor10 April 2024
Eyes watching male figure

Some Australian life insurers may be under-reporting their breaches of the Life Insurance Code of Practice, according to the Life Code Compliance Committee (LCCC).

Delivering its annual Date and Compliance Report covering 2022-23,. The committee chair, Jan McClelland pointed to it being the second consecutive year in which the number of customers impacted by breaches had declined but said there had nonetheless ben an increase in breaches overall.

Further, she said it was concerning that it was third consecutive year of increased breaches.

“While some insurers reported a welcome decrease in breaches, performance of the industry suggests there is still more work to be done,” McLellan said.

“Breaches related to claims handling obligations featured prominently in the increase. Failing to address claims promptly not only breaches Code obligations but can also cause unnecessary stress and frustration for customers, eroding confidence in the industry. Meeting timeframes for claims handling and communication must be a priority focus for insurers.”

She noted that insurers reported that the overall increase in breaches was partially attributed to enhanced compliance frameworks, resulting in improved capabilities to detect, document, and report breaches.

“The industry’s capacity to identify underlying issues and tackle the root causes of breaches is a critical element of its commitment to the Cod,” McClelland said.

She said that while some insurers were reporting more breaches, the LCCC had identified inconsistency and ‘a concerning trend of what appears to be under-reporting by others”.

“We found that some insurers were reporting breaches and complaints in numbers far below what would be expected.”

“Rather than indicating perfect compliance, it suggests deficiencies in processes and systems for detection and reporting breaches and complaints. Not detecting and reporting issues limits an insurer’s ability to effectively remedy situations and make improvements to operations.”

Mike Taylor

Mike Taylor

Managing Editor/Publisher, Financial Newswire

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