Delay in Responding to TPD Claim Breaches Life Code


The Life Code Compliance Committee has issued a Notice of Determination finding that a life insurer breached two sections  of the Life Insurance Code of Practice with regard to a TPD claim.

The committee says that following an assessment and investigation it found the life insurer:

  • Failed to issue a letter within six months of a customer’s claim assessment explaining the reason for the delay on the claim and how to make a complaint
  • Failed to respond to a customer’s complaint within the required 90-day timeframe
  • Failed to provide all the required information to the customer when it did respond

The committee says as to the cause of the issue “…the life insurer cited human error where staff did not follow established processes.”

It says that as remediation, the life insurer:

  • Paid the customer interest of $3,181 for the claim delays
  • Provided feedback to all staff on the importance of following processes

…this  highlights the need for  life insurers to identify and mitigate staff errors and the importance of promptly delivering claim decisions…

The LCCC says this case highlights the need for all life insurers to identify and mitigate staff errors “…and the importance of promptly delivering claim decisions.”

The full determination says the breach related to a consumer who was a member of a superannuation fund. As part of that membership, the consumer had a TPD policy, which was a Group Policy issued by the insurer and owned by the Trustee.

Failing to Include Sum Insured in Annual Notices

In a separate Notice of Determination, the LCCC found that a life insurer failed to include the sum insured in annual notices it sent, affecting 3,679 customers.

The committee says the life insurer cited an inherited issue as the cause “…and has implemented changes to its processes that will ensure its annual notices are all fully compliant with the Code.”

It adds that this case highlights the need “…for all life insurers to thoroughly review processes and documents, and engage with third-party service providers, to ensure compliance with the Code. Better compliance ultimately leads to better outcomes for consumers.”

Click here for the Full Determination.


  1. Meanwhile, if an adviser makes any kind of administrative mistake, the regulator will have your head.

  2. Sadly, the LCCC is really only a marketing exercise that started with the FSC and was adopted by CALI. That’s because the LICOP is not an “approved code of conduct” or a “mandatory code of conduct” for the purpose of ss 1101 AC or 1101 AF of the Corporations Act 2001.
    How could that be? Well, that statement comes from Justice Jackman of the Federal Court of Australia, in a decision against the regulator, handed down on 21 December 2023. Case: ASIC v Zürich, FCA 1641.
    Briefly this was a case where ASIC alleged that One Path ( now in Zurich) had not acted in good faith when they cancelled a policy on the basis of fraudulent nondisclosure. This statement was part of the defense submitted by Zurich, to which Justice Jackson agreed, when he found against ASIC.

    To the best of my knowledge, Zürich life was a member of the FSC, and now a member of CALI .
    Would CALI care to comment?

  3. Is anybody really surprised by this article? Just like the banks delaying transfers for 3 days and skimming interest (until the long overdue OSKO sytem arrived) the insurers delay as long as possible to keep the funds working for them, not the client who needs it most.

    Simply deplorable and completely unjustifiable behaviour which would have the humble adviser thrown in jail in a heartbeat. Just so long as executive bonuses aren't affected, that's the main thing for banks and insurers. This will always be the case until a true BIG STICK arrives in town to do some proper cleaning out. Won't hold my breath . . .

Comments are closed.