Details about how the much-anticipated Life Insurance Code of Practice will be implemented are to be previewed by the FSC at its 2016 Life Insurance Conference in Sydney next month.
Attendees at the 2016 Conference will hear from TAL MD, Brett Clark, along with FSC Director of Policy, Andrew Bragg and Financial Rights Legal Centre Solicitor, Alexandra Kelly, as they outline how this new code is intended to ‘…lift industry standards and deliver real consumer benefits.’
Specifically, the Code is intended to address standards and set benchmarks for life companies in their delivery of underwriting and claims services, as well as addressing complaints processes and procedures.
Speaking with riskinfo about the nature and intent of the new industry Code, Clark noted this was an important milestone for the industry. He said the ultimate success of the financial services industry would be dependent on the extent to which it could build broader consumer trust and confidence in the sector, and that the Code was one of the means of achieving this goal.
…the development of the Code has enabled key stakeholders … to hold a mirror to themselves and ask the questions they must
Clark conceded the Code would not solve all the issues related to consumer trust, but that it was an important first step – “…a milestone”, on which the industry can make a strong statement about what it stands for. He added the consultation process accompanying the development of the Code has enabled key stakeholders, but particularly the life companies, for whom the Code is intended, to hold a mirror to themselves and ask the questions they must, in order to develop a new set of standards on which they will deliver future services to consumers.
Clark also confirmed the FSC was working with the industry and ASIC to target an implementation date of 1 July 2016, subject to final discussions and approval by the regulator.
This Code of Practice is being shaped by the industry to mirror similar codes that already exist within the general insurance and banking sectors. Its development and eventual implementation follows growing momentum for such a code. It featured as part of John Trowbridge’s industry reform model proposals, details of which were released at last year’s FSC Life Insurance Conference.
Outside the controversial remuneration model proposed within the final Trowbridge Report, the life insurance sector was generally supportive of Trowbridge’s recommendations, intended to be viewed and delivered as an entire package, part of which was the implementation of the Code of Practice. Trowbridge’s call for a Life Insurance Code of Practice was also embraced by the then Assistant Treasurer, Josh Frydenberg, and was highlighted as part of the new Life Insurance Framework proposals, which were released in late June 2015.
While not intended to cover the activities and conduct of financial advisers, the proposed Code for the life sector will nonetheless have significant implications for advisers in terms of the minimum standards and range of services consumers will experience in future.
The 2016 FSC Life Insurance Conference will be held in Sydney on Wednesday 16 March at the Four Seasons Hotel. It is a single day event, preceded by the FSC’s annual Life Insurance Industry Awards dinner on the evening of Tuesday 15 March.
One area I would like to see under the new code of practice is the Direct Insurance product pushers, for example Insurance Line (owned by TAL) being forced to provide projection quotes to customers and being sent copies of their completed personal statements. I have come across countless customers who have signed up and get a shock in the second year onwards as they were not properly made aware that premiums were going to increase and neither were the products sold or disclosure properly explained.
It is not surprising that that the biggest lapse issue we have is not from advised customers (which has remained consistent at circa 12%) but from direct insurance (circa 40-50%). We also know from hard evidence that direct claim declines and FOS complaints are significantly higher.
Unfortunately the LIF as per FSC profit plans will see more customers driven towards the direct route. If ever there was an area in need of a code of practice to protect customers, the direct insurance is it.
It is so Unfortunatley true that people are drawn to price or what they perceive to be easy no paperwork no blood test no medicals It all sounds so easy until the claim occurs then reality kicks in
How is it that independant ( there’s that word we cannot use again) are hounded by ASIC based on questionable reports ? And policy “floggers” the direct market can run “amuk” and create a line of complaints for FOS to deal How many of these people or companies ever face action from ASIC All hiding behind that ridiculous General advice warning ?? It should be worded ” buyer beware”
How on earth did this wonderful industry get to this ?? Corporate greed I suspect !!
Well said Reality Check. And the question asked by Ken below bears repeating – How on earth did this wonderful industry get to this ?
Dear me, yet another white paper on how to deliver financial services, particularly life-risk. It seems that the regulators have never been advisers, so it follows they have absolutely no idea what it’s like to do what we do in the industry.
Yet they, without consultation and even legal consideration, have taken it upon themselves to: a) cut commissions on life-risk business; b) ramp up compliance in harmony with this article; c) already have made us provide effectively useless SOAs, endless waivers and other paper paraphernalia; and d) make advisers wait two years to find out if their incomes are really theirs to spend.
Who in their right mind would want to enter an industry that offers so little reward for so much work and frustration?
All of this effort has and will do nothing to alleviate under insurance. The old system wasn’t perfect, true. However, it’s likely to be infinitely better than the one gazetted under LIF.
Absolutely agree that all insurance companies should be made to adhere to a code of practice for both direct and non direct business to help with a sustainable future for all parties.
Insurers accepting applications to rewrite business that is in force with other insurers that has caused some poor behaviour from a minority should be addressed in the code.
I am relieved I have not supported TAL with new business for approximately 3 years or so. I just hope the experts are doing this for the right reasons
Please enlighten us Brett have Advisers ever been consulted with the content of this new world thinking that will go into a Code of Practice. If consultation has taken place across a wide advisor network, I request the results of the survey be provided to all within the industry in an open and honest paper.
I need to understand why those giving advice as to the development and composition
of the Code of Practice have little or know industry knowledge. we should not worry as a degree will fix the shortcoming.
That is nothing different where the FSC, AFA and FPA are going down this Degree qualification path. The people screaming for reform all have a Degree in something or other, they think they know about a business they most likely have never personally ever taken advice to purchase Life Insurance, TPD, Trauma or Income Protection Policy. However it makes a whole word of difference simply they have some letters after their names. I don’t get it where outsiders to an industry can set policy without consultation with the people directly affected, the Advisers. Policy a business where someone from outside their industry is doing everything to put them out of business.
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